Foreign Portfolio Investments (FPIs) into Nigeria’s stock market saw a remarkable increase of 126.8% in 2024, reaching N396.4 billion, up from N174.8 billion in 2023. This growth was largely attributed to the Central Bank of Nigeria’s monetary policy, which boosted interest earnings on portfolio investments, encouraging more foreign inflows. Despite this increase, foreign investment outflows also saw a significant rise of 93.2%, totaling N455.6 billion, compared to N235.8 billion in the previous year.
The combined foreign inflows and outflows in 2024 reached N852.03 billion, marking a 107.5% increase from N410.64 billion in 2023. Domestic investors accounted for the majority of transactions on the Nigerian Exchange (NGX), with N4.734 trillion in total transactions, representing 84.7% of the N5.586 trillion in overall trading volume. Retail investors contributed N2.306 trillion, a substantial rise from N1.120 trillion in 2023, while institutional investors recorded N2.428 trillion, up from N2.047 trillion the previous year.
December 2024 saw a notable surge in total transactions on the NGX, which increased by 52.29% to N673.66 billion from N442.34 billion in November. Compared to December 2023, the total transaction value jumped 56.1%, with domestic investors continuing to outpace foreign investors by a wide margin, accounting for 80% of the overall market activity. Institutional investors, though, slightly outperformed retail investors, posting an 18.5% increase in transactions year-over-year.
Investment analysts, including David Adonri, Vice Chairman of Highcap Securities, observed that the influx of FPIs has a positive effect on the Nigerian foreign exchange market. Adonri noted that foreign portfolio inflows influence exchange rates, as currency rates are governed by supply and demand dynamics, ultimately contributing to the country’s foreign reserves.
The strong performance of both domestic and foreign transactions signals increasing confidence in Nigeria’s stock market and broader economy. While foreign inflows have risen significantly, domestic investors continue to dominate the market, reflecting the growing strength of local economic activity. The outlook for 2025 will likely depend on sustained policy measures and investor confidence.
Source: VANGUARD