The Centre for the Promotion of Private Enterprise has warned that the current pattern of capital inflows exposes the economy to a number of vulnerabilities, despite high headline growth rates.

The warning was issued in a policy brief on Sunday, February 22, 2026.


According to data from the National Bureau of Statistics, overall capital inflows increased to $6.01 billion in the third quarter of 2025, a 380% increase year on year and a 17% increase over the previous quarter.

The comeback indicates that investor confidence has improved as a result of macroeconomic measures such as foreign-exchange market liberalisation, tighter monetary policy, and increased liquidity in the domestic banking system.

The CPPE stated that the rebound suggests that continued stability measures are beginning to have a positive influence 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," according to CPPE.

The think tank, however, observed that the current mix of capital inflows exposes the economy 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.

According to sectoral data, the majority of the money were directed towards the banking and financial industries, with little investment going into manufacturing, infrastructure, and other productive sectors.

"This pattern highlights a continuing structural weakness: growing capital imports have not yet translated into considerable increase of productive capacity. Without increased capital flows into industry, agro-processing, logistics, energy, and export-oriented manufacturing, the broader economy will experience only modest 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," according to CPPE.