January 11, (THEWILL) — Foreign investor participation on the Nigerian Exchange (NGX) strengthened in 2025, marking a clear rebound from years of subdued activity, as improving foreign exchange liquidity, strong equity returns, and policy reforms renewed offshore interest in Nigerian assets.
Data from the Nigerian Exchange show that total equity market turnover reached approximately N10.54 trillion in the first eleven months of 2025, nearly double the N5.59 trillion recorded for full-year 2024. Foreign portfolio investors accounted for about N1.28 trillion, representing around 20.8 percent of total transactions during the period, compared with N852 billion, or 15.3 percent, in 2024 highlighting a marked year-on-year increase in both absolute value and market share.
The improvement reflects a gradual return of foreign capital after several years of weak participation. Foreign flows had been below 15 percent for much of 2019–2023, as investors were deterred by foreign exchange scarcity, restrictive repatriation rules, volatile returns, and uncertainty around fiscal and monetary policy. The NGX All-Share Index, while recovering in 2024, had delivered muted gains compared with peers in other African frontier markets, which further reduced offshore appetite.
Foreign investors have been cautious over the past five years due to policy inconsistencies and currency challenges. 2025 is different reforms, improved liquidity, and solid corporate earnings are drawing capital back.”
The rebound was particularly evident during periods of heightened market activity. In the first nine months of 2025, foreign portfolio transactions rose sharply year-on-year, while in some months foreign participation briefly exceeded 30 percent of total turnover, driven by large block trades and portfolio reallocations by offshore funds.
Market analysts say foreign investors are returning selectively, focusing on liquid stocks with strong earnings visibility and clearer FX exit routes. Nigeria’s relatively high dividend yields and improving regulatory environment have also made equities more attractive compared with other emerging markets.
Sectoral impact: Where activity concentrated
While the NGX does not publish a detailed sector-by-sector breakdown of foreign portfolio flows, trading patterns, liquidity, and sector performance indicate where foreign interest has been most pronounced.
The consumer goods sector emerged as a key beneficiary in 2025, supported by pricing power, FX revaluation effects, and resilient domestic demand. The NGX Consumer Goods Index recorded some of the strongest gains on the exchange, with stocks such as Guinness Nigeria, Unilever Nigeria, NASCON Allied Industries, Honeywell Flour Mills, and Vitafoam Nigeria all rattracting heightened trading activity.
The banking sector also drew significant interest, reflecting its large weight in the market and relatively deep liquidity. Tier-one and select mid-tier banks benefited from improved net interest margins, recapitalisation plans, and attractive dividend yields, making them natural entry points for foreign investors.
In the industrial goods sector, companies such as Beta Glass, Berger Paints, and BUA Cement outperformed, supported by domestic infrastructure activity and import-substitution dynamics, with turnover levels pointing to rising institutional participation.
By contrast, the oil and gas sector lagged the broader market, weighed down by global energy price volatility, regulatory uncertainty, and operational challenges, limiting its appeal to foreign portfolio investors. Telecoms and health stocks saw selective interest but contributed minimally to overall foreign flows.
Several reforms and policy initiatives underpinned the rise in foreign participation:
Foreign exchange reforms – In 2025, the Central Bank of Nigeria (CBN) implemented measures that increased FX liquidity and streamlined repatriation of funds. This helped reduce one of the longest-standing barriers for offshore investors. The gradual unification of the FX market and easing of multiple exchange windows gave foreign investors more certainty about converting Naira proceeds into hard currency.
Regulatory improvements -The Securities and Exchange Commission (SEC) and NGX strengthened investor protection, clarified capital gains tax rules, and tightened oversight of listed companies. These measures improved transparency and reduced perceived structural risks, making offshore participation more appealing.
Banking and market reforms – Recapitalisation of major banks, clearer reporting standards, and tighter corporate governance rules reinforced confidence in Nigeria’s financial institutions, which form a major part of the NGX index.
Macroeconomic adjustments on fiscal measures, inflation containment strategies, and broader economic reforms signaled stability to foreign investors, mitigating concerns that previously discouraged portfolio allocation.
In addition to policy reforms, foreign investor interest was bolstered by:
Strong market performance – The NGX All-Share Index delivered robust gains in 2025, placing Nigeria among Africa’s top-performing equity markets. Strong corporate earnings and dividend announcements reinforced the market’s attractiveness.
Global yield search – With slower growth and tighter monetary policy abroad, frontier markets like Nigeria became comparatively higher-yielding options for portfolio investors.
Improved domestic market depth – Growth in domestic institutional investors, including pension funds and asset managers, enhanced liquidity, indirectly supporting offshore confidence.
Looking ahead, analysts expect foreign participation to continue improving gradually, though not without volatility. Consumer goods, banking, and industrial stocks are likely to remain the main beneficiaries, particularly as companies release full-year earnings and dividend announcements.
However, risks persist. Policy clarity, especially around taxation and regulatory consistency, remains crucial to sustaining offshore confidence. Global risk sentiment, interest-rate expectations in advanced economies, and oil price fluctuations could also influence capital flows.
Most market watchers expect the foreign share of total NGX turnover to edge higher in the coming quarter, potentially moving toward the low-to-mid-20 percent range, provided FX stability and reform momentum continue.
For now, the trend is clear: foreign capital is returning to Nigerian equities cautiously, selectively, and with close attention to policy signals, marking a potential turning point after years of restrained offshore participation.
Ogochukwu Onwaeze
