Turn Hot Money Into Long-term Investment, Economist Urge Nigeria

The chief executive of the Center for the Promotion of Private Enterprise (CPPE) Dr Muda Yusuf, has stressed the need to convert short term capital inflows into long term productive investment for Nigeria to achieve sustainable growth.
Commenting on the capital inflow data released recently by the National Bureau of Statistics (NBS) Yusuf said while the capital importation rebound is commendable, there is need for structural reforms to boost foreign direct investment.

He noted that a closer look at the composition of inflows reveals significant structural risks. More than 80 per cent of the capital imported during the period was portfolio investment, with foreign direct investment accounting for less than five per cent.

Yusuf said while the rebound in Nigeria’s Q3 2025 capital-importation rebound is a welcome development and a positive signal of improving investor sentiment, however, the structure of inflows, heavily portfolio-driven, financially concentrated, and weakly linked to productive sectors, underscores the need for urgent structural reforms.
“The central task before policymakers is clear: move from liquidity-driven recovery to investment-led transformation. Only by converting short-term capital inflows into long-term productive investment can Nigeria achieve sustainable growth, employment expansion, export diversification, and macroeconomic resilience,” he stated.

Capital inflows into the country rose sharply to $6.01 billion in the third quarter of 2025, representing a 380 per cent year-on-year increase and a 17 per cent rise over the previous quarter. The surge, according to the Yusuf, reflects improving investor confidence following recent macroeconomic reforms, including foreign exchange market liberalisation, tighter monetary policy and enhanced liquidity in the financial system.

The CPPE boss further observed that most of the inflows were channelled into the banking and financial services sector, with minimal allocation to manufacturing, infrastructure and other productive segments of the economy. This pattern, the Centre noted, underscores a persistent disconnect between rising capital inflows and real-sector development.
“Financial deepening without corresponding expansion in productive capacity risks creating a liquidity-driven recovery that does not fundamentally alter Nigeria’s economic base,” the he warned.