The Centre for the Promotion of Private Enterprise has cautioned that the current pattern of capital inflows leaves the economy vulnerable to several risks, despite strong headline growth figures.
The warning was contained in a policy brief on Sunday, February 22, 2026.
Data from the National Bureau of Statistics showed that total capital inflows climbed to $6.01 billion in the third quarter of 2025, representing a 380 per cent increase year-on-year and a 17 per cent rise compared with the previous quarter.
The rebound points to improving investor confidence in the wake of macroeconomic reforms, including foreign-exchange market liberalisation, tighter monetary policy, and stronger liquidity within the domestic financial system.
The CPPE noted that the recovery indicates ongoing stabilisation measures are starting to have a positive impact on investor behaviour.
“However, while the headline numbers are encouraging, a deeper examination of the structure and distribution of inflows reveals underlying vulnerabilities that must be addressed to ensure durability and long-term economic transformation,” CPPE stated.
The think tank, however, observed that the prevailing composition of capital inflows leaves the economy exposed to a range of risks, including:
“Persistently weak FDI, reflecting unresolved structural constraints in power supply, infrastructure,logisticsefficiency, and regulatory predictability.
“External concentration risks, increasing exposure to global financial tightening and geopolitical uncertainty.
“Financial-system transmission risks, due to heavy reliance on a limited number of intermediary institutions.”
It warned that without accelerated structural reforms, the recovery in inflows could remain fragile and difficult to sustain.
CPPE also noted that the sharp rise in capital importation was largely driven by portfolio investments, which accounted for more than 80 per cent of total inflows in the third quarter of 2025, while foreign direct investment contributed less than five per cent.
The group warned that portfolio flows are inherently volatile, responding rapidly to shifts in global interest rates, investor sentiment, and policy credibility.
While such inflows can support short-term liquidity and financial market stability, they are vulnerable to sudden reversals.
By contrast, sustainable economic growth, job creation, and export expansion depend largely on long-term foreign direct investment linked to production, infrastructure, manufacturing, and technology transfer.
CPPE maintained that the current composition of inflows reflects a cyclical financial recovery rather than meaningful structural change in the economy.
It added that sectoral data show most of the funds were channelled into the banking and financial industries, with minimal investment reaching manufacturing, infrastructure, and other productive sectors.
“This pattern underscores a persistent structural weakness: rising capital importation is not yet translating into meaningful expansion of productive capacity. Without stronger capital flows into industry, agro-processing, logistics, energy, and export-oriented manufacturing, the broader economy will see limited gains in employment, productivity, and inclusive growth.
“Financial deepening without real-sector expansion risks creating a liquidity-driven recovery that does not fundamentally alter Nigeria’s productive base,” CPPE stated.
