Naira-denominated mutual funds have experienced a remarkable surge of about 140 percent in the past year, signaling renewed confidence in local currency investments as investors increasingly move away from dollar-denominated assets, according to the latest report by KPMG.
The KPMG 2025 Banking Industry Customer Experience Survey Report, titled “Competing for the Customer—Beyond the Basics in an AI-Shaped Financial Landscape,” revealed that while dollar-denominated mutual funds grew modestly by 12 percent—from N1,708 billion in 2024 to N1,920 billion by November 2025—naira-denominated funds soared from N2,289 billion to N5,480 billion over the same period.
This striking trend reflects a recalibration of risk by investors, driven by improving macroeconomic conditions and a perception of greater stability in the naira. According to the report, the local currency’s resilience, coupled with steady economic growth—3.13 percent in Q1 and 4.23 percent in Q2—has positively influenced household financial behavior.
“Improved confidence in the naira has begun to shape savings and investment patterns across income groups,” the report noted. Household savings behavior has notably strengthened, with only 8 percent of respondents reporting no savings, down from 18 percent the previous year. Half of respondents now save between 5 percent and 20 percent of their monthly income, signaling a gradual return to financial discipline despite persistent cost pressures.
Generational trends also reveal shifting attitudes toward financial planning. Gen Z shows growing commitment to saving, with 68 percent allocating at least 5 percent of their income. Millennials remain consistent savers, with 25 percent saving between 11 and 20 percent of income and 19 percent saving between 21 and 40 percent. Generation X continues to prioritize long-term financial security, with 21 percent saving between 21 and 40 percent of income.
The report further highlights cautious optimism in investment behavior. While confidence is improving, Nigerians remain selective in allocating capital. Commodities such as gold are favored by 18 percent of respondents, while fixed deposits, mutual funds, and equities continue to dominate investment portfolios. Around 22 percent of investors commit between 5 and 10 percent of their income to investments, while 17 percent allocate 11 to 20 percent.
Experts say this measured approach underscores the growing importance of trust, financial education, and advisory services. “Consumers are willing to invest—but only when they feel informed and confident in the institutions guiding them,” the report stated.
KPMG noted that Nigeria’s financial ecosystem is steadily transitioning from resilience to reform-driven stability. Banking sector recapitalization efforts, alongside regulatory reforms such as foreign exchange liberalization, digital finance frameworks, and stricter corporate governance enforcement, are reinforcing trust and laying a foundation for long-term economic growth.
The report concludes that banks’ success will increasingly hinge on delivering a customer experience that combines relevance, empathy, and affordability. Institutions that translate macroeconomic reforms into tangible household value through simplified access, digital tools, and responsive services are best positioned to build enduring trust and contribute to Nigeria’s economic stability.
WHAT YOU SHOULD KNOW
Naira-denominated mutual funds surged 140% in a year as Nigerians shifted from dollar assets, reflecting renewed confidence in the naira and cautious optimism in local investments amid improving economic stability.
