Offshore Investment Withdrawals Impact Nigerian Stock Market as Foreign Participation Declines
Concerns are mounting over the significant decline in foreign investment in the Nigerian Exchange Limited (NGX), as offshore investors withdrew N70.45 billion from the market in the first two months of 2025. This development has raised alarms among market analysts, who warn that the trend may hinder Nigeria’s financial integration with global markets. According to the Nigerian Exchange Limited’s report, foreign participation dropped by 40.36% from N71.51 billion in January to N42.65 billion in February, alongside a significant drop in foreign inflows and outflows.
Domestic investors now dominate the NGX, accounting for 84% of market activity, while foreign investor participation has dwindled to just 8.37%. Although domestic transactions fell by 12.83% from N535.54 billion in January to N466.82 billion in February, they still made up the majority of the market’s activity. Meanwhile, the total value of foreign transactions remains low, at just N114.16 billion in 2025 so far, with foreign inflows significantly outpaced by local transactions.
This decline in foreign investment is attributed to ongoing economic challenges in Nigeria, including insecurity, inflation, and high business costs. These factors have led to a steady drop in foreign direct investment (FDI), which has decreased from $8.6 billion in 2009 to $1.8 billion in 2023. Experts suggest that the withdrawal of foreign capital could lead to a host of negative effects, including currency depreciation, higher inflation, and reduced investor confidence in Nigeria’s economic prospects.
While domestic investors continue to drive the NGX, analysts caution that the shift away from foreign participation could limit Nigeria’s ability to fully integrate into global financial markets. They urge the Nigerian government to address structural challenges such as energy deficits, regulatory transparency, and the stabilization of the naira to improve investor confidence and attract sustainable foreign investments moving forward.
Source: the sun