Nigeria is on track to record its strongest year for foreign capital inflows in six years. According to Afrinvest's revised forecast published in February 2026, total capital importation is expected to reach $23.3 billion for 2025 — up from an earlier projection of $19.3 billion. In the first nine months alone, $16.8 billion flowed into the country, with Q3 2025 registering $6.0 billion, a 380.2% year-on-year surge.
For foreign investors evaluating African markets, these numbers demand attention. But the composition of those flows — and the structural reforms driving them — matter far more than the headline figure.
Where the Money Is Going
The sectoral breakdown reveals clear patterns. Banking and financial services dominate, absorbing the largest share of inflows. The electrical sector attracted $710.3 million in the first nine months, manufacturing drew $463.5 million, telecommunications accounted for $392.9 million, and agriculture received $116.1 million. These figures, compiled from the National Bureau of Statistics (NBS), reflect a market that is diversifying beyond its traditional oil dependency — though not as fast as policymakers would like.
The currency picture has also improved. The naira appreciated 4.8% in Q4 2025, averaging N1,451.70 per dollar. Headline inflation eased to 15.2% by year-end, down from the 33.9% peak in March 2024. Open Market Operations (OMO) yields above 19% have been a significant draw for portfolio investors seeking high returns in a stabilizing macro environment.
The Portfolio Problem
Here is the critical nuance that every serious investor must understand: portfolio investment accounts for approximately 85% of total inflows — $14.3 billion in the first nine months. Foreign Direct Investment (FDI), by contrast, represented just 3.3% of the total, amounting to $565.2 million over the same period, with $296.3 million in Q3 alone.
Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), put it bluntly: "More than 80% is portfolio investment, which is volatile and prone to sudden reversals." This is not a criticism of Nigeria's progress — it is a statement of structural reality. Hot money chases yield; it does not build factories, hire workers, or create supply chains.
For investors with a longer horizon, this imbalance actually represents opportunity. The sectors that need patient capital — manufacturing, agriculture, real estate, healthcare, education — are precisely the sectors where competition from other foreign investors remains thin. The FDI gap is a market gap.
What Changed: The Reform Landscape
Several structural reforms have underpinned the capital surge. The Central Bank of Nigeria's move to a more market-driven exchange rate in June 2023, while initially painful, has restored a degree of predictability that investors require. The clearance of the $7 billion FX backlog removed a major deterrent for companies that feared being unable to repatriate profits.
The 2026 tax reform — the Nigeria Tax Act (NTA) 2025 and the Nigeria Tax Administration Act (NTAA) 2025, both effective January 1, 2026 — introduces a more progressive personal income tax framework. The first NGN 800,000 of annual income is now tax-free, and marginal rates have been restructured across wider bands. For employers, this means revised PAYE calculations; for investors, it signals a government willing to modernize its fiscal architecture.
Meanwhile, the Nigerian Investment Promotion Commission (NIPC) continues to streamline the investment approval process, and Special Economic Zones — particularly the Lekki Free Trade Zone — offer tax holidays and simplified customs procedures for qualifying investments.
Sector-by-Sector Entry Points
For foreign investors considering Nigeria in 2026, the following sectors offer the most compelling risk-adjusted entry points:
- Financial Services & Fintech: Nigeria's fintech ecosystem is the most mature in Africa. With 60% of the population under 25 and mobile penetration exceeding 90%, digital financial services remain a high-growth vertical. Regulatory clarity from the CBN's licensing framework has reduced uncertainty.
- Manufacturing: Despite a 54% decline in foreign manufacturing investment in 2025 (per Punch Nigeria), this contraction creates a buyer's market for assets and partnerships. Import substitution policies and the African Continental Free Trade Area (AfCFTA) make Nigeria a logical manufacturing hub for West Africa.
- Agriculture & Agro-processing: With 84 million hectares of arable land and a $35 billion annual food import bill, the gap between domestic production and consumption is enormous. The government's backward integration policies in sugar, rice, and dairy create structured incentives for investors.
- Real Estate & Infrastructure: Lagos alone has a housing deficit estimated at 3 million units. Commercial real estate in Victoria Island and Lekki commands premium rents, while industrial parks and logistics facilities are undersupplied relative to demand.
- Healthcare: Medical tourism costs Nigeria an estimated $1 billion annually. Private hospital chains, diagnostic centres, and pharmaceutical manufacturing represent underserved markets with strong demand fundamentals.
The Practical Reality of Market Entry
Numbers tell one story; operational reality tells another. Registering a company through the Corporate Affairs Commission (CAC) takes 2-4 weeks. Obtaining an Expatriate Quota for foreign employees requires 8-12 weeks. Navigating NAFDAC registration for consumer products can take 6-18 months. These timelines are not insurmountable, but they require local coordination, regulatory expertise, and patience.
This is precisely the gap that concierge-level business services fill. The difference between a smooth market entry and a frustrating one often comes down to having the right local partners who understand the regulatory landscape, maintain relationships with key institutions, and can anticipate bottlenecks before they become blockers.
Key Takeaways
- Nigeria's $23.3 billion capital inflow forecast for 2025 is the strongest in six years, driven by macro stabilization and high OMO yields
- 85% of inflows are portfolio investment — FDI remains just 3.3%, creating opportunity for patient capital
- The 2026 tax reform introduces a more progressive framework with a 0% band on the first NGN 800,000
- Manufacturing, agriculture, healthcare, and real estate offer the best risk-adjusted entry points for long-term investors
- Operational execution — company registration, work permits, regulatory approvals — requires local expertise and coordination
Sources: Afrinvest Capital Importation Report (Feb 2026), National Bureau of Statistics, BusinessDay, Punch Nigeria, Centre for the Promotion of Private Enterprise (CPPE), Central Bank of Nigeria, BIPO Nigeria Tax Reform Guide (Feb 2026)