Nigeria attracted $10.37 billion in foreign capital in the first quarter (Q1) of 2026, but foreign direct investment (FDI) accounted for only 1.3 percent of the total inflows, PricewaterhouseCoopers (PwC) has said.
Gatekeepers News reports that PwC disclosed this in its H2 2026 Nigeria Economic Outlook report, noting that total capital importation increased by 83.8 percent year-on-year (y/y), largely driven by foreign portfolio investment (FPI).
According to the report, FPI rose 89.5 percent y/y and 79.77 percent quarter-on-quarter to $9.86 billion, representing 95.1 percent of total capital inflows.
FDI, which represents longer-term investment in businesses and productive assets, increased by 6.96 percent y/y to $135.08 million.
“The opportunity is to translate this investor interest into more long-term capital,” PwC said.
“FDI reached only US$135.08 million in Q1 2026. FDI represented 1.3% of total inflows, despite increasing by 6.96% y/y.”
PwC said the composition of foreign capital showed that investors were participating significantly in Nigeria’s financial markets, while relatively little capital was being directed towards productive assets.
“Portfolio investment accounted for 95.1% of total capital inflows, supported by attractive yields and greater participation in Nigerian financial assets,” the firm said.
The report said portfolio investment was concentrated in money market instruments and bonds, which attracted $6.5 billion and $3.23 billion, respectively.
“This shows significant foreign participation, but with capital still weighted towards financial assets,” PwC said.
‘Stronger Pipeline of Bankable Projects Can Attract More FDI’
PwC said Nigeria must focus on converting increased foreign investor interest into long-term productive investment.
“Greater policy certainty, a stronger pipeline of bankable projects and a competitive operating environment can attract more FDI into businesses and infrastructure,” the report said.
“This would support expanded capacity, deeper supply chains, employment and broader economic growth.”
The firm said improving the business environment would be critical to ensuring that capital inflows translate into productive capacity rather than remaining concentrated in financial assets.
It identified approval processes, land access, financing and foreign exchange bottlenecks as constraints delaying the conversion of investment into operating businesses and jobs.
‘Private-Sector Credit Remains Weak’
PwC also identified access to affordable credit as a major constraint on investment and business expansion.
The firm said private-sector credit stood at 21.3 percent of GDP, below the 33 percent average for sub-Saharan Africa.
“Easing access to affordable private sector credit is critical to translating reforms into MSME-led growth,” PwC said.
The report noted that credit to government increased by 18 percent between December 2025 and May 2026, compared with 6.9 percent growth in private-sector credit.
“Private-sector credit declined by 14.3% between February and May 2026, while credit to government increased by 2.6%, highlighting the need to strengthen credit to productive private-sector activity,” the firm said.
PwC said while tight monetary conditions were supporting price and foreign exchange (FX) stability, they were also contributing to high borrowing costs.
“High borrowing costs continue to constrain private-sector credit,” the firm said.
It recommended credit windows, partial credit guarantees and blended finance to address the financing gap faced by small and medium-sized businesses seeking facilities between N500,000 and N30 million.
‘Debt Service Still Nigeria’s Key Fiscal Vulnerability’
PwC warned that fiscal pressures could remain elevated in the second half of 2026 due to continued spending needs, a persistent budget deficit and high government financing requirements.
The firm said uneven revenue performance could increase government financing needs if sustained.
“If sustained, the revenue gap could increase the government’s financing needs, leading to higher borrowing requirements and continued debt service pressures,” the report said.
PwC described debt service as Nigeria’s “key fiscal vulnerability”, noting that nearly half of government revenue was absorbed by debt payments in 2025.
“Debt service pressure remains the key fiscal vulnerability, as nearly half of government revenue is still absorbed by debt payments, limiting fiscal space for capital spending and growth-enhancing investment,” the firm said.
The professional services firm said Nigeria’s macroeconomic stabilisation had improved, but the benefits had not yet fully translated into stronger household welfare.
It identified high essential costs, limited access to credit, weak income and employment gains, and inadequate social protection as factors delaying improvements in household purchasing power.
“These channels are necessary for stability but create temporary adjustment pressures for households and firms,” PwC said.
The firm recommended targeted household support, improved agricultural productivity, better storage and logistics, and expanded domestic energy supply to ease pressure on household costs.
