Foreign investors pulled a substantial N420.37 billion out of the Nigerian equities market in the first quarter of 2025, marking a staggering 251 percent increase in capital flight compared to the N119.81 billion recorded in the same period last year. This significant outflow highlights lingering apprehension among international investors regarding Nigeria’s economic stability and policy consistency, despite recent reforms.

 

Data from the Nigerian Exchange (NGX) reveals a dramatic shift in market dynamics, particularly in March 2025. Total foreign transactions soared to N699.89 billion in March, a sharp rise from N42.65 billion in February and N71.51 billion in January.

 

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Foreign investors commanded 62.74 percent of the total trade value of N1.115 trillion in March, a stark contrast to their 8.37 percent share in February and 11.78 percent in January.

Interestingly, the March figure was almost evenly split between inflows of N349.97 billion and outflows of N349.92 billion. Analysts suggest this near-equal split points towards quick “round-trip” movements and short-term positioning rather than long-term investment commitments.

 

Cumulatively, foreign inflows for Q1 2025 reached N393.68 billion, a 322 percent increase from N93.37 billion in Q1 2024. However, the quarter concluded with a net deficit of N26.69 billion in foreign investment, underscoring persistent investor caution.

 

While foreign activity surged, domestic participation in the market saw a decline in March. Total domestic transactions dropped by 10.98 percent to N415.62 billion from N466.82 billion in February and N535.54 billion in January. Retail investors traded N197.12 billion in March, down from N214.51 billion in February, while institutional investors accounted for N218.50 billion, lower than February’s N252.31 billion.

 

Despite the recent dip, domestic trades year-to-date in 2025 have totalled N1.417 trillion, compared to N1.335 trillion in Q1 2024, though the growth momentum has slowed. Domestic investors now account for 63.53 percent of total market activity, a decrease from 86.23 percent a year earlier.

 

March 2025 marked a significant milestone as the monthly trade value crossed the N1 trillion mark for the first time this year, reaching N1.115 trillion. This more than doubled February’s N509.47 billion and surpassed January’s N607.05 billion, representing a 107.14 percent year-on-year increase from N538.54 billion recorded in March 2024. In dollar terms, at the March NAFEM rate of N1,536.82/$1, the month’s total trade volume equated to $725.86 million, up from $341.36 million in February.

 

Historically, domestic investors have largely dominated the Nigerian equities market. Between 2007 and 2024, domestic transactions rose from N3.556 trillion to N4.735 trillion, while foreign transactions grew from N616 billion to N852 billion. However, the March figures indicate a notable shift, with foreign investors outperforming domestic participants for the first time in over a year.

 

For Q1 2025, total transactions stood at N2.232 trillion, with foreign trades accounting for N814.05 billion (36.47 percent) and domestic trades at N1.417 trillion (63.53 percent). This represents a significant departure from Q1 2024, when foreign investors contributed a mere 13.77 percent, and domestic trades held a dominant 86.23 percent share.

 

The sharp increase in foreign trades and outflows is unfolding against a backdrop of economic reforms and exchange rate instability. Since mid-2023, the Central Bank of Nigeria has implemented FX liberalisation and tightened monetary policy in an effort to attract foreign capital and curb inflation. However, the continued depreciation of the naira—from N1,492.49/$1 in February to N1,536.82/$1 in March—and persistent inflationary pressures, with headline inflation rising to 24.23 percent in March 2025, appear to be dampening investor confidence.

 

Some market observers suggest that some foreign investors may be leveraging the market to exploit brief windows of naira strength, entering during periods of currency appreciation and exiting once depreciation resumes. Others remain cautious, awaiting more definitive signs of sustainability in Nigeria’s fiscal and monetary reforms. The current market dynamics suggest a preference for speculative bets on short-term currency movements over long-term commitments to Nigerian assets.