Nigeria moved into a borrowing position in 2025 after a sharp drop in foreign investment inflows and rising payments to investors weakened its financial account.
This was disclosed by the Central Bank of Nigeria (CBN) in its latest balance of payments report.
The decline happened even as the country’s external reserves increased, pointing to pressure on foreign capital coming into the economy.
A review of the data by Pinnacle Daily shows Nigeria recorded net borrowing of $1.69 billion in 2025, compared to net lending of $9.65 billion in 2024.
The main reason was a steep fall in portfolio investment, which is money foreign investors put into stocks, bonds and similar assets.
Portfolio inflows dropped by 48.3 per cent to $8.04 billion, down from $15.55 billion the previous year.
This was the biggest factor behind the decline the report revealed.
It also shows that, at the same time, more money left the country.
Nigerian investors increased their investments abroad, with portfolio outflows of $0.91 billion and higher direct investments overseas.
The situation was made worse by a rise in payments to foreign investors.
Outflows on dividends and interest rose by 60.9 per cent to $9.09 billion.
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This means Nigeria paid more returns to investors who already had money in the country.
In simple terms, even though foreign investors still had funds in Nigeria, more money was going out to service those investments.
FDI not enough
Foreign direct investment (FDI), which is a longer-term investment in businesses, increased strongly by 149.1 per cent to $4.01 billion.
However, this was not enough to make up for the sharp drop in portfolio inflows and the rise in money leaving the country.
Nigerian direct investment abroad also rose to $1.19 billion, while other investment flows also declined, adding further pressure.
Despite these challenges, Nigeria’s external reserves rose by 13.83 per cent to $45.75 billion at the end of 2025, up from $40.19 billion in 2024.
The country still recorded an overall balance of payments surplus of $4.23 billion, although this was lower than $6.83 billion in the previous year.
Stronger trade performance, helped by reduced fuel imports and exports from the Dangote Refinery, improved the goods balance.
However, this did not lead to higher financial inflows. Instead, foreign investors reduced new investments while continuing to earn more from existing ones.
Changing pattern of capital flows
The CBN data, which shows a shift in how money moves in and out of Nigeria, pointed out that while long-term investments improved, short-term portfolio flows dropped sharply.
At the same time, it also shows that profit repatriation and overseas investments increased.
As such, these trends pushed the country’s financial account into deficit, even though reserves grew during the year.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X
