Foreign portfolio investment (FPI) inflow into the Nigerian equities market surged significantly, rising from modest yearly growth of four per cent in 2023 to an impressive 16 per cent last year.
Data from the Nigerian Exchange Limited (NGX) showed that foreign inflows hit N344.3 billion in 2024, 181 per cent jump from the N122.55 billion recorded in 2023.
FPI is the money flowing into a country from foreign investors to purchase stocks, bonds or other financial assets on the local market. This refers essentially to passive investment where the investors do not have control over the company.
Foreign inflow is a broader term encompassing all types of money coming into a country from abroad, including both portfolio and direct investments.
This remarkable growth reflects the increasing confidence in the economic reforms and policies of the current administration.
The development is emphasised by the National Bureau of Statistics (NBS), which revealed that FPI accounted for approximately 58 per cent of Nigeria’s total capital importation in the first half of 2024. This represented a staggering year-on-year increase of 360.28 per cent.
Key to this resurgence is the administration’s deliberate focus on macroeconomic stability, exchange rate unification and efforts to improve the ease of doing business.
The initiatives have not only attracted foreign investors but also bolstered the credibility of the Nigerian market as a viable investment destination.
Further underscoring this renewed investor confidence is the notable increase in market activity. The average daily trading volume, which had plateaued at 500 million shares for years, saw an extraordinary rise to 900 million shares this month.
This surge signals heightened participation in the equities market, driven by both foreign and domestic institutional investors.
Institutional investors have shown a growing appetite for Nigerian equities, buoyed by the government’s implementation of growth-oriented policies.
These include reforms in the energy sector, fiscal discipline, and infrastructural development, which collectively aim to create a sustainable growth trajectory for the economy.
As the Nigerian equities market continues to gain traction, operators predict a more robust inflow of foreign investments in the coming quarters.
The Vice President of Highcap Securities Limited, David Adonri, attributed the sharp increase in FPI to the resurgence of foreign investors’ confidence in Nigeria’s economy and capital market.
According to him, critical market reforms and the resolution of foreign investors’ trapped funds were key drivers of this renewed trust, encouraging their return to the Nigerian market.
He pointed out that the sustained rally in equities since 2023 has significantly boosted both the volume and value of trades, underscoring the overall improvement in investor sentiment.
He said the government’s projections for foreign exchange and inflation rates in 2025 have positively influenced investor interest in Nigerian equities.
“The sustained growth in trading volumes and increasing participation of institutional investors could position the Nigerian market as a major player in emerging economies, provided the momentum of reforms is maintained.
“This impressive performance highlights the transformative potential of well-executed economic policies and sends a strong message to global investors about Nigeria’s readiness to reclaim its position as a leading investment hub in Africa,” he said.
The all-share index, which measures the performance of listed equities, soared significantly, trailing the 47 per cent gain in 2013 to 37 per cent last year.
At the close of transactions on December 31, it closed at 102,926.4 points from 74,773.77 at which it opened trading in January 2024, representing 37 per cent growth.
