The Nigerian Exchange Group delivered its strongest quarterly performance in a decade in Q4 2025, with the NGX All-Share Index gaining 18.4% in three months and total market capitalisation reaching $55 billion. More notable than the headline number: foreign portfolio investment inflows hit $2.8 billion for the quarter, the highest since 2019 and a decisive reversal of the outflow trend that has plagued Africa's largest stock market since the pandemic.
What Changed
The recovery narrative centres on three policy reforms enacted since President Bola Tinubu took office in May 2023. The first — and most consequential — was the unification of Nigeria's multiple exchange rates into a single market-determined rate. The naira lost over half its value in the adjustment, falling from approximately ₦460/$ to ₦1,500/$ at its weakest. But the devaluation eliminated the parallel market premium that had made Nigeria effectively uninvestable for foreign portfolio managers.
The second reform was the removal of the opaque and bureaucratic Certificate of Capital Importation (CCI) requirements that had trapped foreign capital in the country. Under the new framework, repatriation of investment proceeds is streamlined through authorised dealers, with processing times reduced from weeks to days.
The third factor is the Central Bank of Nigeria's (CBN) monetary policy normalisation. Under Governor Olayemi Cardoso, the CBN has raised its benchmark interest rate to 27.25%, the highest in the institution's history, to combat inflation that peaked at 33.9% in 2024. While the rate increases have squeezed parts of the real economy, they have stabilised the naira and created attractive yields on Nigerian fixed-income instruments, drawing foreign capital.
Who's Buying
The composition of foreign buying is instructive. Frontier market-dedicated funds — which had largely exited Nigeria between 2020 and 2023 — are rebuilding positions. The banking sector has been the primary beneficiary: shares in GTCO, Zenith Bank, Access Holdings, and UBA have all more than doubled from their lows, driven by net interest margin expansion and improved asset quality.
Dangote Group entities have attracted significant inflows. Dangote Cement, Africa's largest cement producer, has benefited from Nigeria's construction and infrastructure spending. The imminent listing of Dangote Refinery — which, if completed at expected valuations, would be the largest IPO in African history — is creating additional investor anticipation.
Consumer goods stocks have been more muted. Companies facing the dual pressure of naira devaluation (which increased input costs for imported raw materials) and consumer spending compression have seen earnings under pressure. Nestlé Nigeria, Unilever Nigeria, and PZ Cussons have underperformed the broader index.
The Bigger Picture
Nigeria's capital market recovery matters beyond its borders. The country represents roughly 20% of Sub-Saharan Africa's GDP. When Nigeria's capital markets are closed to foreign investors — as they effectively were during the multiple exchange rate era — the entire "invest in Africa" thesis is undermined. The reopening of the NGX to meaningful foreign participation is a signal event for the continent.
The NGX is also deepening its product offerings. Exchange-traded funds (ETFs) tracking the NGX 30 index are now available. The derivatives market, launched in 2019, is seeing growing volumes. Plans for a technology-focused board — modelled on the JSE's AltX or London's AIM — are under development and could provide a domestic listing venue for Nigeria's technology startups.
Risks Remain
The bullish narrative has caveats. Naira stability is not guaranteed — the currency remains vulnerable to oil price shocks (petroleum still accounts for 90% of export earnings) and fiscal pressures. Inflation, while declining from its peak, remains above 25% and erodes real returns for local-currency investors. Political risk — never absent in Nigeria — could disrupt reform momentum.
Liquidity, while improved, remains thin by global standards. The NGX's average daily trading value of $30 million compares unfavourably to the JSE's $1.5 billion. Large orders can move individual stock prices by several percentage points, creating execution risk for institutional investors.
But the direction of travel is clear. Nigeria's capital market reforms, however painful in their execution, are creating the conditions for a deeper, more liquid, and more internationally integrated stock market. For investors willing to accept frontier-market volatility, the NGX offers exposure to the economic potential of 230 million people at valuations that remain well below emerging-market norms.
