Nigeria’s bold currency reforms are paying off, sparking renewed interest from foreign investors after years of economic uncertainty. The Central Bank of Nigeria (CBN) initiated a series of measures to stabilize the foreign exchange market, unify exchange rates, and clear the backlog of trapped foreign currency. While initially viewed as risky, these reforms have attracted record inflows, signaling that investor confidence in Nigeria is returning.
Data from FMDQ shows that total inflows into the Nigerian Foreign Exchange Market (NFEM) jumped 62.2% month-on-month to $5.15 billion in October, hitting a five-month high. Capital inflows in the first quarter of 2025 rose 67% compared to the previous year, with foreign portfolio investments particularly leading the surge. Analysts note that transparent market conditions, a unified exchange rate, and policy consistency are driving these gains.
CBN Governor Olayemi Cardoso’s strategic approach has been central to this comeback. By clearing over $7 billion in FX backlog and gradually reducing the central bank’s market intervention, Nigeria’s sovereign risk spread has fallen to its lowest since 2020. Investment analysts say these moves have improved long-term economic stability, while the banking and financial sectors have emerged as the primary beneficiaries of portfolio capital inflows.
The recent rebasing of Nigeria’s GDP further enhances the country’s attractiveness to investors. With a clearer picture of the economy, showing growth in agriculture and services, foreign investors now have better insight into emerging sectors such as creative industries and technology. Experts argue that this accurate economic data, combined with currency reforms, makes Nigeria a more appealing destination for sustainable investment.
Despite global uncertainties, such as renewed trade tensions in major economies, Nigeria’s capital inflows remain robust. Analysts caution that continued discipline, transparency, and policy consistency are essential to ensure that these inflows translate into real growth for businesses and households. For now, the numbers indicate a hopeful narrative: Nigeria is regaining credibility, investors are returning, and the path toward a $1 trillion economy is becoming increasingly tangible.
source: Business day