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Nigeria’s growing attraction to foreign capital is coming with a rising external risk, as foreign claims on Nigerian assets surged ahead of Nigerians’ investments abroad, widening the country’s net financial liability position to $90.2 billion in 2025.
The latest International Investment Position (IIP) data of the Central Bank of Nigeria (CBN) showed that Nigeria’s net liability position increased by $7.5 billion from $82.7 billion in 2024, underscoring the country’s deepening exposure to global capital flows and shifts in investor sentiment.
Nigeria’s external financial assets stood at $125.6 billion in 2025, compared with foreign liabilities of $215.8 billion. In effect, non-residents now have significantly more financial claims on Nigerian assets than Nigerians hold abroad.
The IIP differs from the Balance of Payments, which tracks transactions during a period. It measures the stock of external assets and liabilities and therefore provides a clearer picture of Nigeria’s vulnerability to external financial shocks.
Portfolio investment was a major driver of the deterioration, with liabilities rising by $10.1 billion, largely reflecting foreign purchases of Nigerian debt securities, including Open Market Operation (OMO) bills.
Nigeria’s relatively high interest rates have made its fixed-income market attractive to international investors pursuing carry-trade opportunities.
The resulting inflows have boosted FX liquidity, supported demand for domestic securities and helped strengthen the naira.
But the same capital can leave just as quickly. Portfolio investors are highly sensitive to interest rates, exchange-rate expectations, global liquidity and risk appetite.
A change in any of these variables could trigger capital flight, weaken the naira, tighten financial-market liquidity and put pressure on the CBN’s reserves.
The development therefore presents policymakers with a dilemma: while high yields attract foreign capital and support the FX market, dependence on mobile portfolio funds creates an external vulnerability. Foreign direct investment (FDI) offers a more positive dimension of the data.
Direct investment liabilities increased by $6.7 billion, suggesting stronger foreign participation in Nigerian businesses.
Unlike portfolio funds, FDI typically represents longer-term commitments to businesses, productive assets and strategic investments. It can generate employment, expand productive capacity, transfer technology and support economic growth.
The policy priority should therefore be to attract more FDI while reducing the economy’s dependence on short-term capital seeking high yields. The increase in Nigeria’s reserve assets provides an important buffer.
Reserve assets rose by $5.6 billion during the period, strengthening the CBN’s capacity to manage FX pressures, meet external obligations and absorb shocks from sudden changes in capital flows.
Nigerians also expanded investments abroad, with direct and portfolio investments and other foreign assets increasing by about $3.3 billion.
However, the gap remains substantial. Nigeria’s $125.6 billion in external assets is still far below its $215.8 billion in liabilities, leaving the country with a sizeable negative net international investment position.
Nigeria’s external position remains closely linked to oil prices and production. Strong crude prices can boost export earnings, FX inflows and reserves, supporting the naira.
Conversely, falling oil prices, weaker production or export disruptions could quickly reduce foreign exchange earnings and intensify pressure on the currency and reserves.
This makes export diversification increasingly urgent. The CBN data highlight the paradox of Nigeria’s growing integration into global capital markets. Foreign investment is increasing, signalling confidence in the economy, but the composition of those inflows matters as much as their size.
Nigeria must increasingly attract capital that finances productive investment rather than merely chasing high domestic yields.
Strengthening reserves, deepening domestic capital markets, expanding non-oil exports, improving the investment climate and encouraging Nigerian businesses to build assets abroad will be critical.
Ultimately, the $90.2 billion liability position is a warning that foreign capital can support growth, but cannot substitute for stronger domestic production and export capacity.
Nigeria’s immediate challenge is to turn today’s foreign inflows into lasting productive capacity, higher exports and stronger external buffers before global financial conditions turn less favourable.
