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Under Tinubu, investors prefer lending to Nigeria over investing in it

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A record $10 billion flowed into Nigeria in the first quarter of 2026, and almost none of it will build a factory, hire a worker, or survive beyond the next Treasury bill rollover.
The numbers look impressive on paper, and the Tinubu administration is understandably keen to advertise them.

Since the President took office in May 2023, Nigeria has attracted $47.6 billion in capital importation, culminating in a first-quarter 2026 reading of $10 billion — the highest single-quarter total since the National Bureau of Statistics began tracking the data in 2014.
Dig beneath the headline, however, and the celebration begins to look slightly premature.
Of that $47.6 billion, just $1.9 billion is foreign direct investment. The remaining $45 billion is portfolio capital — money that likes Nigeria well enough to visit, but not enough to move in.
In the first quarter of this year, $6.5 billion of the $10 billion headline figure flowed directly into money-market instruments, continuing a pattern that saw $13 billion of the $23 billion recorded in 2025 take the same route.
Foreign investors are not buying Nigeria’s long-term growth story. They are lending to its government and collecting the juicy coupons amidst moderate to zero risk.
Thus, the logic is not difficult to follow. Nigeria’s Treasury bills and short-dated government securities offer yields north of 20 percent, with tenors of six to twelve months and the implicit backing of a sovereign borrower eager to keep foreign capital onside.
For a portfolio manager in London or Dubai, the calculation is straightforward: why commit to a decade-long infrastructure project or a manufacturing plant burdened by erratic power supply, opaque land-title processes, and port congestion when a government instrument offers a 20 percent return and an exit door that never appears to lock? Most rational investors would not make that trade. Most are not.
The surprising part is not that investors prefer Treasury bills to factories. It is that anyone expects otherwise.
The administration’s defenders make three reasonable arguments. The first is that Tinubu’s reforms were designed to stabilise the macroeconomy, not immediately unleash a flood of foreign direct investment.
The second is that FDI tends to arrive years after reforms begin, once investors become convinced that policy changes will outlive the speeches announcing them.
The third is that several large investment commitments remain stuck in the lengthy process of becoming actual investments.
All true, yet after a decade of declining FDI, the discussion starts to sound less like an argument about timing and more like an argument about faith.
Nigeria’s peak FDI inflow was recorded in 2014. Since then, governments have changed policies, ministers and exchange-rate systems with admirable frequency. What has not changed is the reluctance of long-term investors to commit serious capital.
The relevant question is whether investors with long horizons believe Nigerian institutions can sustain a predictable, rules-based environment long enough to justify the risk. The evidence suggests many remain unconvinced.
The question is no longer whether reforms need more time. The question is why investors continue demanding more proof.
Portfolio inflows undoubtedly help. They provide dollar liquidity, support the naira and help finance a government whose enthusiasm for fiscal restraint remains largely theoretical.
But portfolio capital is loyal only until something more attractive appears. The same investors currently earning 20 per cent on Nigerian paper can leave with roughly the same speed they arrived. They are tourists, not settlers.
FDI behaves differently as it is sticky in ways that matter. It builds assets, creates jobs, transfers technology, and generates multiplier effects that ripple through the wider economy.
Factories cannot be wired out of the country before lunch. Supply chains are inconveniently difficult to liquidate overnight, while jobs, technology transfers and industrial capacity tend to linger.
Its absence helps explain an awkward feature of Nigeria’s recent reform story. The macroeconomic indicators increasingly resemble success, while everyday economic reality remains stubbornly unconvinced.
Inflation is easing, the exchange rate has stabilized, and foreign reserves look healthier. Yet unemployment remains elevated, manufacturing output remains weak, and living standards remain under pressure.
Stabilisation has occurred, but prosperity appears to be running slightly behind schedule.
The administration should therefore be cautious about treating record capital-importation figures as a verdict on its reforms.
Nigeria has become highly successful at attracting investors willing to lend to the government for a few months. Attracting investors willing to build for the next few decades remains a more elusive achievement.
For now, the money is voting for Nigeria’s Treasury bills rather than Nigeria itself. (Nairametrics)
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