Nigeria recorded an 11.7% increase in foreign direct investment (FDI) in the second quarter of 2026, rising to $1.15 billion from $1.03 billion in the first quarter. This growth is a positive development for the country's economy, which has been seeking to attract more foreign investment. The Central Bank of Nigeria (CBN) released the data as part of its Balance of Payments report. The increase in FDI is a welcome development, but it is still overshadowed by portfolio investment inflows.
Foreign portfolio investment, often referred to as "hot money," climbed to $7.09 billion in the second quarter, representing a 17.6% increase from the previous quarter's $6.03 billion. This type of investment is considered volatile as it can be easily withdrawn from the economy. Portfolio investment accounted for about 86% of total capital inflows, while FDI made up just 14%. The dominance of portfolio investment raises concerns about the stability of Nigeria's capital inflows.
The ratio of FDI to portfolio investment is stark, with portfolio investment inflows being about six times larger than FDI. For every $1 of long-term direct investment that entered Nigeria in the second quarter, approximately $6.17 came through portfolio investments. This disparity highlights the need for Nigeria to focus on attracting more stable and long-term investment. The CBN's data also showed that combined FDI and portfolio investment inflows stood at $8.24 billion during the quarter.
Beyond FDI and portfolio flows, other investment liabilities brought another $2.75 billion into the economy during the quarter. However, Nigerian investments abroad also resulted in capital outflows. Direct investment assets totalled $560 million, while portfolio investment assets totalled $700 million. Other investment assets generated a much larger $7.96 billion outflow, partly offsetting the foreign capital entering the economy.
The country's financial account recorded a net lending position of $1.74 billion in the second quarter, reversing the $2.03 billion net borrowing position recorded in the preceding quarter. This improvement in capital flows came alongside a stronger external sector position. Nigeria's current account surplus jumped 67.9% quarter on quarter to $7.54 billion from $4.49 billion.
The improvement in the current account surplus was driven largely by a widening goods account surplus, which rose to $10.12 billion from $5.96 billion in the first quarter and $4.85 billion in the corresponding period of 2025. Total exports climbed to $20.08 billion from $15.56 billion in the preceding quarter, supported by higher earnings from crude oil, natural gas, refined petroleum products, and non-oil exports.
Refined petroleum product exports recorded the strongest increase, rising by 66.24% to $3.94 billion, while non-oil exports increased by 25.30% to $3.12 billion. Diaspora inflows also strengthened the external account, with workers' remittances rising by 9.8% to $5.82 billion from $5.30 billion in the first quarter. The growth in exports and remittances contributed to the stronger external sector position.
Key points
- Nigeria's foreign direct investment grew 11.7% in Q2 2026, but portfolio flows dominated with $7.09 billion in inflows.
- The country's current account surplus jumped 67.9% quarter on quarter to $7.54 billion.
- Refined petroleum product exports rose by 66.24% to $3.94 billion in the second quarter.
