…FDI drops by 19%
From Adanna Nnamani, Abuja
Nigeria suffered a $10.6 billion crash in portfolio investment in the first quarter of 2025, reflecting deepening capital flight and rising investor concerns over the country’s economic direction.
The latest Balance of Payments report released by the Central Bank of Nigeria (CBN) showed that portfolio investment liabilities swung dramatically from a robust $5.61 billion inflow in Q4 2024 to a net outflow of $5.03 billion in Q1 2025, marking a $10.64 billion reversal in just one quarter.
The crash in portfolio flows, which include investments in government securities and CBN instruments, signals waning confidence in Nigeria’s short-term economic outlook, amid persistent exchange rate volatility, surging inflation and policy uncertainty.
The development also contributed to the overall weakening of Nigeria’s external sector, with total foreign direct investment (FDI) inflows falling by 19 per cent to $250 million in Q1 2025, from $310 million in the previous quarter.
Other investment liabilities, which typically reflect loans and deposits from non-residents, dropped sharply from $13.89 billion to $4.32 billion. In addition, Nigerian investors sent more capital abroad, with direct investment assets showing a net outflow of $550 million.
Despite the sharp capital flight, Nigeria managed to maintain a current account surplus of $3.73 billion in Q1 2025, supported by improved trade performance. This was slightly lower than the $3.80 billion posted in Q4 2024 but higher than the $3.69 billion recorded a year earlier.
The surplus was driven by stronger export earnings, which rose 9.79 per cent to $13.91 billion. The growth was led by a 26.7 per cent increase in gas exports to $2.66 billion and a 30.4 per cent rise in non-oil and electricity exports. Crude oil exports remained stable at $8.59 billion. Meanwhile, imports declined modestly to $9.75 billion from $10.05 billion, due to reduced inflows of petroleum products and non-oil goods.
However, the services account continued to post a large deficit, rising to $3.69 billion from $3.48 billion in the previous quarter, driven by increased spending on travel and business services. Financial service inflows also fell during the period.
Nigeria’s overall balance of payments position deteriorated, sliding into a $2.77 billion deficit in Q1 2025, compared to a $1.10 billion surplus in Q4 2024. The weakening external position also caused a fall in the country’s external reserves, which declined from $40.19 billion at the end of December 2024 to $37.82 billion in March 2025.
The report showed that the net errors and omissions account, which tracks unrecorded financial flows, stood at $3.85 billion, slightly down from $4.02 billion previously.
The balance on the secondary income account also dropped by 17.9 per cent to $5.29 billion, driven by a fall in diaspora remittances from $5.08 billion to $4.93 billion and a more than 67 per cent plunge in foreign aid to the general government, likely due to geopolitical factors and recent executive orders restricting aid from Western nations.
“Nigeria’s overall balance of payments for
Q1 2025 resulted in a deficit of US$ 2.77
billion.
“External Reserve decreased to US$37.82
billion as at end-March 2025, from US$40.19 billion as at end-December 2024,” the apex bank stated.
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