By Seun Ibiyemi
The Centre for the Promotion of Private Enterprise (CPPE) has cautioned that Nigeria’s strong rebound in capital importation may prove fragile if structural weaknesses in the economy are not urgently addressed.
In a statement issued on Sunday by Chief Executive Officer of the CPPE, Dr Muda Yusuf, read that total capital inflows into Nigeria rose to $6.01 billion in the third quarter of 2025, representing a 380 per cent year-on-year increase and a 17 per cent quarter-on-quarter growth.Employee fraud costs Nigerian MSMEs ₦10trn annually, threatening jobs, growth – CPPE
He described the rebound as a positive signal of improving investor sentiment, attributing the surge to recent macroeconomic reforms, including foreign exchange market liberalisation, tighter monetary policy and improved liquidity in the domestic financial system.
However, it warned that the composition of the inflows raises sustainability concerns.
According to Dr. Muda Yusuf, more than 80 per cent of the inflows were portfolio investments, while foreign direct investment (FDI) accounted for less than five per cent. It noted that portfolio flows are typically short-term and highly sensitive to global financial conditions, making them vulnerable to sudden reversals.January Inflation drop signals path to economic stability – CPPE
“While such inflows provide liquidity and help stabilise financial markets in the short term, the organisation stressed that sustainable growth, job creation and export expansion depend largely on long-term FDI directed at production, infrastructure, manufacturing and technology transfer.
He also observed that most of the capital was channelled into the banking and financial sectors, with limited investment in manufacturing, infrastructure and other productive sectors.
Yusuf warned that without stronger capital flows into industry, agro-processing, energy, logistics and export-oriented manufacturing, the broader economy would record minimal gains in employment and productivity.
He further highlighted concentration risks, noting that inflows were heavily sourced from a few countries, particularly the United Kingdom, the United States and South Africa. It said this exposes Nigeria to external shocks arising from policy changes and monetary tightening in those jurisdictions.
In addition, he pointed that a significant share of the inflows was intermediated through a small number of banks, raising potential financial-system transmission risks.
To strengthen the durability of the recovery, the he urged the government to accelerate structural reforms, including improvements in electricity supply, transport and logistics infrastructure, regulatory predictability and contract enforcement.
He also called for deliberate policies to channel capital into export-oriented manufacturing, agro-processing, industrial parks and infrastructure development, while diversifying capital sources through stronger engagement with Gulf, Asian and intra-African investors.
Yusuf said the key policy task is to move from a liquidity-driven recovery to investment-led transformation.
He emphasised that only by converting short-term financial inflows into long-term productive investment can Nigeria achieve sustainable growth, employment expansion and macroeconomic resilience.
