Nigeria is witnessing a notable revival in foreign-exchange inflows as investor confidence gradually returns, following years of policy uncertainty and market volatility. The latest data from the FMDQ Exchange shows that FX inflows jumped to $5.15bn in October, up sharply from $3.18bn in September — the highest in five months. Analysts say the boost reflects renewed optimism triggered by the Central Bank of Nigeria’s sweeping reforms, which are beginning to restore credibility to a market long plagued by distortions.
Since assuming office in 2023, CBN Governor Olayemi Cardoso has focused on clearing FX backlogs, unifying multiple exchange-rate windows, and strengthening transparency in the foreign-exchange system. These efforts have attracted praise from global institutions such as the IMF and World Bank, which view the reforms as vital to rebuilding trust. While challenges remain, investors who once hesitated to enter the Nigerian market are starting to reassess their risk perceptions. A portfolio manager at East Capital recently noted that “Nigeria appears to be back in business” as reforms take hold.
Capital importation figures reinforce this momentum. In Q1 2025, Nigeria recorded $5.64bn in total inflows — a 67 per cent year-on-year rise — driven largely by portfolio investors seeking high returns from treasury bills and government securities. However, foreign direct investment remains weak, accounting for barely two per cent of inflows. The dominance of short-term, yield-chasing capital has raised concerns among analysts, who warn that depending heavily on speculative flows makes the economy vulnerable to sudden reversals if market conditions shift.
Despite these risks, Nigeria continues to attract investors to its debt market. Oversubscription of the country’s recent $2.25bn Eurobond issuance signals strong confidence in ongoing fiscal and monetary reforms. Banks are also benefiting from the stronger FX outlook, receiving more than half of total capital imported in Q1 2025. With the CBN’s ambitious recapitalisation drive underway, the banking industry is expected to raise additional funds to support Nigeria’s vision of building a $1tn economy by 2030.
Yet, experts stress that sustaining this recovery requires deep structural reforms. The IMF recently acknowledged Nigeria’s progress — from easing inflation to improving reserve buffers — and attributed the gains to policy coordination under Cardoso. But as the CBN governor has repeatedly emphasised, investor confidence thrives on predictability. Ensuring stability in the FX market, reducing insecurity, and improving power supply will determine whether Nigeria’s current FX inflow surge evolves into long-term, inclusive economic growth. Cardoso put it simply: “Once the fundamentals are right, you don’t have to beg anybody to invest.”
source: punch