Nigeria’s capital importation recorded massive growth in the first quarter of 2026, surging 83.80 per cent year-on-year to hit a record $10.37bn, up from the $5.64bn recorded in Q1 2025.
According to the weekly economic analysis released by an investment firm, Meristem Securities Limited, this sharp, broad-based acceleration in foreign participation was primarily channelled through the local banking system.
“The banking sector stayed the primary gateway, attracting $7.55bn or 72.80 per cent of total inflows,” the report stated, adding that “financing activities followed at $2.43bn (23.40 per cent), leaving manufacturing at a marginal 1.50 per cent ($152.30m).”
Analysts at Meristem noted that the current investment wave favours short-term instruments rather than long-term infrastructure.
“This structure highlights that, despite the strong headline expansion compared to Q1 2025, capital importation remains largely a financial-market-driven cycle rather than a shift towards productive long-term investment,” the firm explained.
The report attributed the revived offshore appetite for Nigerian fixed-income assets to recent macroeconomic reforms.
“The strong year-on-year acceleration versus Q1 2025 was driven by improved FX market functioning, exchange rate flexibility, and relatively attractive domestic yields, which collectively restored offshore appetite,” Meristem noted.
“This translated into an 8.54 per cent year-on-year growth in capital inflows’ contribution to GDP, reaching 3.76 per cent in Q1 2026,” it added.
This influx of foreign portfolio investment aligned with intense activity in the Central Bank of Nigeria’s open market operations.
“The CBN’s OMO auction recorded robust demand, with total subscriptions of N3.28tn versus an allotment of N3.04tn, reflecting sustained liquidity appetite for short-term, high-yield instruments,” the analysis revealed, adding that “demand was heavily concentrated in the 133-day paper, while stop rate averaged 20.99 per cent.”
A similar trend played out in the sovereign debt market, where investors showed a strong preference for longer-dated maturities.
“In the Treasury bills market, demand rebounded above the N2.00tn level to N2.16tn, up 8.64 per cent from the previous auction,” Meristem reported.
“Investor appetite remained strongly skewed toward the long end, with the 364-day bill attracting N1.95tn of subscriptions,” it added.
The report also highlighted major structural changes within the domestic financial landscape, notably the CBN’s recent final approval for Abbey Mortgage Bank Plc to transition into a full commercial bank, with operations set for Q4 2026.
“The approval represents a regulatory licence upgrade supported by both strong financial performance and capital readiness,” the analysts stated, pointing to a shareholder-approved capital raise of about N264bn to meet tier-2 capital requirements.
However, Meristem cautioned that entering the wider commercial banking space comes with fresh hurdles.
“From a strategic standpoint, this transition shifts the bank from a specialised mortgage lender to a full-service financial institution. However, the move also introduces greater operational and financial risks, particularly around credit underwriting, liquidity management, and deposit mobilisation,” the firm noted.
Looking forward, Meristem Securities expressed optimism that foreign portfolio inflows will maintain their momentum, provided policy consistency remains intact.
“We expect the growth in FPI to be sustained, supported by macroeconomic stability, expected moderation in inflation, still attractive domestic yields, improved sovereign credit ratings, and credible FX policy execution,” the report concluded.