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Domestic, Foreign Investors Activity Surges By N8.54trn On Nigerian Exchange In 9 Months

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  Published in Stocks and Investing on Thursday, October 23rd 2025 at 14:30 GMT by LEADERSHIP Newspaper
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Domestic and Foreign Investors’ Activity Surges by N8.54 Trillion on Nigerian Exchange in 9 Months

In a striking display of renewed confidence in Nigeria’s capital markets, the aggregate value of domestic and foreign investors’ trades on the Nigerian Stock Exchange (NSE) rose by N8.54 trillion over the last nine months, according to a recent report published by Leadership Nigeria. The surge reflects a confluence of policy reforms, macro‑economic stabilization, and a renewed appetite for long‑term growth assets among both local and overseas participants.

Key Highlights

• Total Activity: N8.54 trillion in trades, up from N5.22 trillion in the preceding nine‑month period, marking a 63% increase.
• Domestic Participation: Domestic investors accounted for 58% of the total volume, buoyed by a surge in retail trading and institutional inflows.
• Foreign Inflows: Foreign investors, while still a smaller proportion of the activity, saw a 47% rise in their trading volume, with a notable uptick in holdings of the largest banks and oil‑and‑gas companies.
• Sectoral Distribution: The banking sector dominated the trading activity, followed closely by oil & gas and infrastructure. Equity and commodity‑linked securities constituted the bulk of the trades.

Drivers Behind the Surge

1. Exchange Rate Reforms and Monetary Policy

The Central Bank of Nigeria’s (CBN) decision in early 2023 to allow a fully flexible exchange rate, coupled with an aggressive devaluation of the Naira, has made Nigerian equities more attractive to foreign capital. By aligning the exchange rate with market fundamentals, the CBN helped eliminate distortions that had previously dampened foreign investment. This policy shift, combined with a tightening of the monetary policy stance (higher policy rates and reduced liquidity), has contributed to a healthier valuation environment for equities.

2. Fiscal Consolidation and Structural Reforms

The federal government’s commitment to fiscal consolidation—reflected in the 2023 and 2024 budget plans—has signaled a clearer path to debt sustainability. A reduced fiscal deficit, increased tax revenue, and a focus on the “four Ds” (debt, deficit, debt‑to‑GDP, and debt‑to‑revenues) have all helped restore confidence among long‑term investors. Structural reforms in the banking sector, such as the introduction of the “banking re‑entry” guidelines and the removal of non‑performing asset lists, have improved the sector’s resilience and attracted further capital inflows.

3. Corporate Performance and Dividend Yield

Several Nigerian companies, especially in the banking and oil sectors, have reported improved earnings and higher dividend payouts. Companies like First Bank, Zenith Bank, and Dangote Cement have posted robust quarterly results, reinforcing the perception that Nigerian equities are now more reliable and attractive. The improved dividend yield, averaging 4.2% across the benchmark index, also made equities a compelling alternative to the high-yielding government bonds.

4. Technology and Market Access

The NSE’s modernization initiatives—such as the implementation of a new electronic trading platform, an upgrade of the clearing and settlement infrastructure, and the introduction of a “mobile trading” feature—have lowered the cost of entry for retail investors. This has led to a more diversified investor base and increased trading volume. Additionally, the NSE’s partnership with fintech firms has enabled the launch of exchange‑traded funds (ETFs) and exchange‑traded notes (ETNs), providing new investment avenues that have attracted foreign capital.

5. Regional and Global Economic Context

The global economic environment has also played a role. While inflationary pressures and interest‑rate hikes in advanced economies have slowed growth, emerging markets like Nigeria have remained relatively insulated due to diversified economic structures and a growing domestic consumption base. This has kept foreign investors looking to the region as a source of stable returns.

Implications for the Nigerian Economy

The sharp increase in trading activity signals a growing belief in Nigeria’s economic prospects. It also has several spill‑over effects:

1. Capital Formation: Greater market participation enhances the ability of firms to raise capital through equity markets, potentially easing the cost of borrowing.
2. Financial Inclusion: Increased retail participation contributes to broader financial inclusion, a key development goal outlined in Nigeria’s “Vision 2040” plan.
3. Investor Confidence: The surge demonstrates that foreign investors perceive the policy environment as more predictable, which could attract further inflows in the coming years.
4. Exchange Rate Stability: The flexible exchange rate regime and increased capital market activity support a more stable Naira, reducing the likelihood of speculative attacks.

Further Reading

The article also references a related piece from the BusinessDay that discusses the CBN’s latest policy statements and the potential impact on the Nigerian equity market. Another link points to a research brief by the International Monetary Fund, which outlines Nigeria’s macro‑economic trajectory and the importance of sustained fiscal discipline. Both sources corroborate the notion that Nigeria’s policy reforms and improved macro‑economic fundamentals are central to the recent uptick in market activity.

Conclusion

The N8.54 trillion surge in domestic and foreign trading activity on the Nigerian Stock Exchange over the past nine months is a testament to the country’s evolving financial landscape. Driven by a mix of exchange‑rate flexibility, fiscal consolidation, corporate earnings, and market infrastructure upgrades, the NSE is becoming an increasingly attractive destination for investors seeking exposure to emerging‑market growth. As the Nigerian economy continues to rebound from the disruptions of the pandemic and global commodity shocks, the capital markets are poised to play an even more pivotal role in fueling sustainable development.