Analysts at Cowry Asset Management have called on the Federal Government to address insecurity and other critical structural challenges that hinder long-term investment in Nigeria. This comes as the country attracted $10.37 billion in capital importation in the first quarter of 2026, its strongest quarterly performance since 2019.
Call for Structural Reforms
The analysts noted that while recent economic reforms and improved foreign exchange market conditions have helped restore investor confidence, Nigeria must tackle insecurity, infrastructure deficits, regulatory uncertainties, and bureaucratic bottlenecks to convert short-term capital inflows into investments that support sustainable economic growth.
Key Recommendations
According to Cowry Asset Management's latest Capital Importation Flashnote, policymakers should intensify efforts to improve security, strengthen infrastructure, ensure regulatory consistency, maintain stability in the foreign exchange market, and create investment opportunities across more states to reduce concentration risks. Successfully addressing these challenges would be critical to transforming short-term capital inflows into long-term productive investments capable of driving industrialisation, job creation, and sustainable economic development.
Strong Capital Inflows
Nigeria recorded total capital importation of $10.37 billion in the first quarter of 2026, marking a significant increase compared to previous quarters and the country's strongest quarterly inflow in about seven years. Cowry Asset Management attributed this strong performance to the positive impact of ongoing economic reforms, improved liquidity in the foreign exchange market, and strengthening macroeconomic conditions.
Investor Confidence Boosted
The analysts said recent policy measures, including exchange rate convergence, improved access to foreign exchange, and tighter monetary policy, have boosted investor confidence and strengthened Nigeria's appeal as a destination for foreign capital. The report states: "The sharp increase in capital importation underscores the positive impact of ongoing economic reforms, improved foreign exchange market stability, and the strengthening macroeconomic fundamentals. The convergence of exchange rates, enhanced FX liquidity, and tighter monetary policy have collectively improved investor confidence and repositioned Nigeria as a more attractive destination for short-term capital flows."
Concerns Over Investment Composition
Despite the strong inflows, the firm expressed concern over the composition of the investments, noting that a large portion of the funds entered the country as portfolio investments, particularly in money market instruments and fixed-income securities. The analysts warned that heavy reliance on portfolio inflows could expose the economy to sudden capital flight during periods of market uncertainty or changing global financial conditions.
Weak FDI Performance
The firm also highlighted the weak performance of foreign direct investment (FDI), noting that long-term investors remain cautious due to persistent structural issues in the economy. According to the analysts, the low level of FDI indicates that investors with long-term horizons are still concerned about challenges such as insecurity, inadequate infrastructure, policy inconsistencies, and the overall cost of doing business. They maintained that while the surge in capital inflows reflects growing confidence in recent reforms, attracting more foreign direct investment would be crucial for building a resilient economy capable of generating jobs, expanding productive capacity, and supporting long-term growth.
