By halfway through 2025, overseas investment in the Nigerian stock market had grown more than twice, mirroring growing investor confidence driven by improved foreign exchange stability and broader economic reforms.Â
Data released by Nigerian Exchange Limited (NGX) show that foreign portfolio investors (FPIs) exchanged equities totalling N996.03 billion in the first half of the year, significantly higher than the N458.29 billion recorded during the same period in 2024.
The latest leap signals a welcome change in mood as foreign investors keep finding their way into Nigeria’s capital market following months of high volatility and uncertainty. The N996.03 billion worth of equity transactions executed by foreign players accounted for over 29 percent of total transactions traded on NGX in the five months, indicating renewed appetite for Nigerian equities by foreign investors.
What’s Driving the Uptick
The foreign investment boom is, therefore, directly to blame for enhanced forex stability and macroeconomic performance. This year, the Central Bank of Nigeria (CBN) has undertaken a string of foreign exchange market reforms meant to stabilize rates, and investor confidence has recovered. Such a more stable monetary policy has enhanced the investment environment in Nigeria to lure foreign investors.
Foreign investors are also taking positions ahead of long-term profit as Nigeria’s capital market starts to gain steam. Less risk for returns to swap means hedging FX volatility, a major concern for frontier market portfolio choices in Nigeria.
Confidence Returning After Decades of Exiting
Foreign portfolio investment in Nigeria suffered in recent years due to capital controls, dual exchange rates, and country risk increases. However, the 2025 figures show a reversal of such a trend. The doubling of foreign equity transactions in one year shows how currency stability plays a role in attracting or repelling foreign capital.
Operators in the industry believe that the arrival of foreign institutional investors into the Nigerian equities market typically represents a sentiment indicator of the overall economy. When foreigners seriously reinvest, it implies that policymakers and local investors will thereafter look for the realization that reforms are making progress and the country is constructing its way back into the international financial community.
Implications for the Nigerian Economy
Increases in foreign transactions in equity have effects that extend past the stock market. Foreign participation will lead to deeper markets, tighter bid-ask spreads, and improved price discovery. It also keeps with Nigeria’s economic prospects because investors’ views of future growth and stability drive portfolio flows.
The Nigerian Exchange has led the way in reforms that further promote transparency, governance, and investor protection, the ingredients foreign investors apply when making an investment decision. If the trend continues, it could lay the groundwork for healthier foreign inflows into equities and the financial system at large.
Looking Ahead
Though this momentum is welcome, analysts set out that long-term investor confidence would ride on policy consistency, particularly on FX repatriation, inflation control, and fiscal transparency. Foreign investors are risk-averse by default and are so convenient in a place to shift profits in their favor once again if risks resurface or reforms get reversed.
But the surprise upsurge in foreign equity trade volumes is a huge victory for the Nigerian economy. It proves that international capital will pay back positively if all the ingredients exist: transparent policy, FX stability, and level regulation. The Nigerian stock market seems to be savoring the leftovers of that positivity.
