Foreign investors are showing stronger appetite for Nigeria as inflows from foreign sources into the foreign exchange (forex) market rose to the highest level in more than five years.
Latest report at the Nigerian Autonomous Foreign Exchange Market (NAFEM) yesterday indicated that monthly inflows to the forex market rose by 53.5 per cent to $4.74 billion in January 2025, from $3.09 billion recorded in December 2024.
The surge was particularly driven by inflows from foreign sources, which jumped to its highest level in more than five years, with an increase of 192.1 per cent from $790.3 million in December 2024 to $2.31 billion in January 2025.
Foreign sources accounted for 48.8 per cent of total inflows into the forex market while collections from local sources accounted for 51.2 per cent.
Inflows from foreign sources underscored increased investors’ appetite for Nigerian investments.
Foreign portfolio investments (FPIs) transactions grew by 213 per cent between December 2024 and January 2025. This moderated decline in inflows from other corporates and foreign direct investments (FDI), which dropped by 45.4 per cent and 36.5 per cent respectively.
Inflows from local sources inched up by 5.6 per cent from $2.3 billion in December 2024 to $2.43 billion in January 2025, driven by increases across all segments.
Also, inflows from individuals rose by 33.2 per cent while inflows from the Central Bank of Nigeria (CBN) and exporters and importers improved by 20.1 per cent and 20.9 per cent respectively. However, inflows from non-bank corporates dropped by 10.7 per cent.
Analysts said the upsurge in inflows underlined increased market confidence and improved trade opportunities at the Nigerian capital market.
‘Barring any shock, we anticipate forex inflows to remain robust in the short term due to improved market confidence, which has been bolstered by the adoption of the Electronic Foreign Exchange Market System (EFEMS)’, Cordros Capital stated.
FPI transactions at the Nigerian Exchange (NGX) had more than doubled from N410.62 billion in 2023 to N852.03 billion in 2024.
The increase in foreign transactions supported resilient domestic demand to push NGX to its highest-ever turnover of N5.587 trillion in 2024. It had recorded N3.578 trillion in 2023.
Nigerian equities market started this year on a bullish note with net capital gain of N1.95 trillion in January 2025. Most analysts expected the market to record a double-digit return for the year.
Aggregate market value of all quoted equities at the NGX closed January 2025 at N64.709 trillion as against N62.763 trillion recorded as the year’s opening value.
The All Share Index (ASI)- the common value-based index that tracks all share prices at the NGX, posted average return of 1.53 per cent in January 2025, rising from the year’s opening index of 102,926.40 points to close at 104,496.12 basis points.
Nigeria’s recent $2.2 billion Eurobond had recorded 300 per cent oversubscription with investors staking $9 billion on the country’s first Eurobond in more than two years. Nigeria offered two tenors of a six and half years and 10 years Eurobonds, with both medium-tenor and long-tenor bonds massively oversubscribed.
The strong international demand allowed Nigeria to tighten its coupon rates with the guidance rates for the 6.5 years and 10 years bonds at 9.625 per cent and 10.375 per cent respectively, a substantial discount to initial guidance.
Experts have attributed the upbeat at the stock market to the increasing attractiveness of the Nigerian market to foreign investors, the ongoing economic reforms, resilient earnings by Nigerian companies, exchange rate differential, banking recapitalisation and the reform in the oil sector.
Managing Director of AIICO Capital, Dr Femi Ademola, said Nigerian equities have become very attractive to both foreign and domestic investors.
‘The equities market has become very attractive, mostly due to the devaluation of the currency, which make the shares very cheap, especially to foreign investors’.
