Nigeria’s growing foreign investment inflows have failed to translate into adequate financing for businesses, as most funds are channelled into government securities and financial markets rather than productive sectors.
According to a report by African Business, portfolio investments accounted for $9.86 billion, representing more than 95 per cent of Nigeria’s $10.37 billion capital importation in the first quarter of 2026.
Foreign direct investment stood at just $135.08 million, representing 1.3 per cent of total inflows, highlighting the limited funding directed towards long-term business expansion.
Despite the increase in available capital, lending to Nigeria’s manufacturing and agricultural sectors declined by 14.8 per cent to ₦5.45 trillion between January and August 2026, according to Central Bank of Nigeria data cited in the report.
Businesses have continued to face high borrowing costs, with some commercial loans attracting interest rates of between 30 and 46 per cent.
The report noted that banks have increasingly favoured government securities because of their attractive returns and lower risks, leaving small businesses and productive industries struggling to secure affordable financing.
Nigeria’s business financing gap has been estimated at $131 billion, underscoring the challenge of directing investment towards enterprises capable of supporting production, employment and economic growth.
Source: African Business – Businesses starved of capital as Nigeria flooded with ‘hot money’.
