KEY POINTS

• Capital importation rose 182 percent to $3.52bn in January, the CBN said.
• Foreign portfolio investment made up 95.7 percent of the inflow.
• Foreign direct investment fell 80 percent to just $0.03bn.

Nigeria’s capital importation jumped 182 percent in January to $3.52 billion, as foreign investors poured money into government bonds and money market instruments. The Central Bank of Nigeria reported the surge in its January economic report. Moreover, the rebound shows renewed appetite for Nigerian assets, even if the inflows skewed heavily toward short-term bets.

What drove the capital importation surge

Foreign portfolio investment did almost all the work. Specifically, portfolio inflows leapt to $3.37 billion from just $0.94 billion in December, making up 95.7 percent of the total capital importation. Therefore, hot money chasing yields on bonds and short-term instruments, rather than long-term factories, fueled the jump. High interest rates, with the benchmark at 26.5 percent, have made naira bonds and treasury bills attractive to foreign funds. The 2023 reforms that floated the naira and lifted rates have lured back funds that fled during the earlier currency crisis.

The other categories shrank. According to the CBN, “other investment,” mainly loans, slipped to $0.12 billion, while foreign direct investment collapsed 80 percent to just $0.03 billion. Consequently, the figures point to confidence in returns, but not yet in building lasting businesses on the ground. Economists draw a sharp line between portfolio flows and direct investment, since the latter builds factories and jobs that outlast market swings.

Where the money came from

Two countries dominated the inflows. The United States supplied 46.25 percent and the United Kingdom 40.57 percent, together accounting for almost nine of every 10 dollars. Additionally, Mauritius, South Africa and the United Arab Emirates rounded out the top five, with smaller sums from France, Belgium, Singapore, the Isle of Man and Morocco.

The banking sector took the lion’s share at home. Specifically, banks absorbed 75.15 percent of the inflows, followed by financing activities at 22.20 percent. Meanwhile, production and manufacturing drew just 1.16 percent, a sign that factories still struggle to attract foreign capital.

A heavy tilt toward Lagos

Geography told its own story. Lagos State alone pulled in 90.17 percent of the money, while the Federal Capital Territory took 9.80 percent. However, the rest of the country barely featured, as Ogun and Akwa Ibom states attracted slivers of the total. The thin direct-investment numbers, meanwhile, underline how little of the money is reaching the wider real economy.

The numbers cut both ways. While the headline jump signals returning investor interest, the reliance on portfolio flows leaves Nigeria exposed. Indeed, such money can exit as fast as it arrives if yields fall or the naira wobbles. Together, the data shows an economy winning back traders, but still waiting for the patient capital that builds jobs.