Nigeria’s capital markets have witnessed a dramatic surge in foreign portfolio investment, with inflows through the stock market skyrocketing by nearly 846% over the past two years, according to recent data from the Nigerian Exchange Limited (NGX).
The figures paint a picture of renewed international confidence in Africa’s largest economy, as foreign portfolio inflows climbed to N1.03 trillion as of September 2025, a staggering increase from the N108.93 billion recorded in 2023. This represents one of the most significant capital flow reversals the Nigerian equity market has experienced in recent years.
Sharp Increase in Foreign Activity
The NGX’s report on “Domestic and Foreign Portfolio Participation in Equity Trading” reveals that total foreign transactions—comprising both inflows and outflows—surged by 613.4% to N1.8 trillion in the two years, compared to N258.02 billion in 2023.
However, the investment story comes with a caveat: foreign outflows also increased substantially, rising 443.6% to N810.39 billion from N149.09 billion over the same period. This suggests that while foreign investors are increasingly active in Nigerian markets, some are also taking profits or rebalancing their portfolios.
Despite the significant outflows, net foreign investment remains positive, indicating that more capital is entering the country than leaving—a critical metric for economic stability and market confidence.
Domestic Investors Dominate Market Activity
While foreign participation has grown dramatically, domestic investors continue to dominate trading activity on the NGX. Local transactions hit N6.69 trillion in the two years, outperforming foreign transactions by a remarkable 2,495% when compared to the N258.02 billion in foreign transactions recorded in 2023.
Domestic transactions themselves grew by 172.6% to N6.69 trillion from N2.454 trillion in 2023, demonstrating a robust local appetite for equity investments.
Overall, total market transactions by both foreign and domestic investors expanded by 214.8% to N8.53 trillion from N2.71 trillion, underscoring the broadening depth and liquidity of Nigeria’s capital markets.
Linking Investment Flows to Economic Reforms
Market analysts attribute the surge in foreign investment to the controversial but far-reaching economic reforms initiated by President Bola Ahmed Tinubu’s administration in 2023.
Tajudeen Olayinka, an investment banker and stockbroker, connected the investment surge to broader macroeconomic stabilization. “I think it tells the story behind the growing stability in the foreign exchange market—a situation of continued accretion to foreign reserves and declining inflation and interest rates,” Olayinka said.
He characterized the reforms as a “forward-thinking and inevitable adjustment program” that, while painful, addressed “nagging issues around macroeconomic imbalances.”
The Tinubu administration’s removal of fuel subsidies and unification of multiple exchange rates—moves that initially sparked inflation and hardship—appear to be bearing fruit in terms of investor confidence. Foreign exchange reserves have strengthened, and the naira has shown signs of stabilization after years of volatility.
Caution Amid Optimism
Despite the positive trends, experts warn against premature celebration. Olayinka emphasized that “other outstanding structural issues must also be addressed by the government as quickly as possible to deal with a possible reversal of capital flow that could arise from external shocks.”
He added a critical benchmark: “Until inflation and interest rates moderate to single digits, we cannot begin to celebrate.”
David Adonri, analyst and vice executive chairman of Highcap Securities Limited, provided additional context on the turnaround. “In 2023, the Foreign Portfolio Investment outflow surpassed the inflow, an indication of eroded investors’ confidence,” Adonri noted. “However, in the two years up to 2025, FPI inflow surpassed outflow, clearly indicating an increase in foreign investors’ confidence.”
Market Performance Reflects Confidence
The investment surge has been mirrored in market performance. The NGX All Share Index (ASI) has experienced meteoric growth, rising from approximately 50,000 points in 2023 to over 155,000 currently—more than tripling in value.
Adonri highlighted that “more capital has been formed through new issues in the past two years than in the previous ten years,” indicating not just secondary market trading but genuine capital formation for Nigerian businesses.
“The massive inflow and retention of sizeable quantities of FPI in the past two years has stabilized the foreign exchange market and increased the wealth of investors with a multiplier effect on the economy,” Adonri concluded.
Looking Ahead
As Nigeria navigates its economic transformation, the capital markets have emerged as a barometer of investor sentiment. The dramatic increase in foreign portfolio investment suggests that international investors are cautiously optimistic about Nigeria’s economic trajectory.
However, with inflation still elevated and structural challenges remaining, the sustainability of these inflows will depend on the government’s ability to maintain reform momentum while addressing concerns about infrastructure, security, and business environment constraints.
For now, the Nigerian Exchange stands as a rare bright spot in an economy still grappling with the growing pains of comprehensive reform—a signal that, for better or worse, the world is watching Nigeria’s economic experiment with renewed interest.
WHAT YOU SHOULD KNOW
Nigeria’s stock market has experienced a dramatic turnaround, with foreign investment inflows surging 846% to N1.03 trillion over two years—reversing the capital flight seen in 2023. This reflects growing international confidence in President Tinubu’s economic reforms, which have stabilized the foreign exchange market and pushed the stock market index from 50,000 to over 155,000 points.
However, experts caution that while the trend is encouraging, sustainability depends on bringing inflation and interest rates down to single digits and addressing remaining structural challenges. The surge signals cautious optimism, but Nigeria’s economic transformation is still a work in progress that requires continued reform to prevent potential capital reversals.
