Foreign investors pulled out N420.37 billion from the Nigerian equities market in the first quarter of 2025, representing a 251% year-on-year increase in outflows compared to the N119.81 billion recorded in Q1 2024, the latest data from the Nigerian Exchange (NGX) shows.
The spike in capital flight comes at a time when Nigeria is implementing significant economic reforms, especially in the foreign exchange market, amid heightened investor uncertainty.
Coupled with global macroeconomic headwinds, the equities market saw erratic participation patterns, particularly in March 2025.
Foreign trades rise sharply in March, driven by block transactions
According to the NGX Domestic and Foreign Portfolio Investment Report for March 2025, total foreign transactions climbed to N699.89 billion, a 1,541% increase from N42.65 billion in February 2025 and N71.51 billion in January.
This increase was attributed to block trades, large-volume, privately negotiated transactions typically executed by foreign institutional investors. Foreign investors dominated trading in March, accounting for 62.74% of the N1.115 trillion total trade value, compared to just 8.37% in February and 11.78% in January.
Within the March total, foreign inflows stood at N349.97 billion, while outflows reached N349.92 billion, suggesting a near one-to-one capital rotation. This liquidity-driven round-trip points to short-term positioning rather than longer-term portfolio commitment.
By contrast, foreign inflows and outflows in February were significantly lower at N18.05 billion and N24.60 billion, respectively, with January even more subdued at N25.66 billion inflow and N45.85 billion outflow.
Q1 2025 foreign outflows rose 251% YoY, and inflows up 322%
In Q1 2025, total foreign outflows reached N420.37 billion, more than triple the N119.81 billion recorded in the same period in 2024—a 251% year-on-year increase. Foreign inflows also surged by 322%, rising from N93.37 billion in Q1 2024 to N393.68 billion in Q1 2025.
Despite the rise in inflows, the quarter closed with a net capital deficit of N26.69 billion, highlighting continued investor apprehension toward long-term exposure in Nigerian equities.
Total foreign transactions for Q1 2025 amounted to N814.05 billion, a 282% jump from N213.18 billion recorded in Q1 2024.
Domestic investors pulled back in March despite the market-wide rally
While foreign interest exploded in March, domestic participation declined. Total domestic transactions fell by 10.98%, from N466.82 billion in February to N415.62 billion in March. This was a reversal from January’s strong showing of N535.54 billion.
A closer breakdown of the March figures shows:
- Retail investors traded N197.12 billion, down 8.11% from N214.51 billion in February and N267.35 billion in January.
- Institutional investors contributed N218.50 billion, a 13.40% drop from N252.31 billion in February and N268.19 billion in January.
Year-to-date, domestic trades stood at N1.41798 trillion, down from N1.33476 trillion in Q1 2024 in terms of growth momentum. Domestic participation now represents 63.53% of the market, compared to 86.23% in Q1 2024.
March pushes total transactions above N1 trillion for the first time in 2025
Driven by foreign block trades, March 2025 became the first month in the year to record over N1 trillion in total transactions, clocking N1.115 trillion. This was more than double February’s N509.47 billion and well ahead of January’s N607.05 billion—a 118.95% month-on-month increase.
Compared to N538.54 billion in March 2024, the March 2025 figure represents a 107.14% year-on-year increase.
In dollar terms, using the March NAFEM rate of N1,536.82/$1, the March trade volume equates to $725.86 million, up from $341.36 million in February.
Historical trend still favor domestic investors
Over an 18-year period, domestic investors have consistently dominated Nigeria’s equities market. Between 2007 and 2024, domestic transaction volume rose from N3.556 trillion to N4.735 trillion, while foreign transactions grew from N616 billion to N852 billion.
However, March 2025 signaled a possible shift in dynamics. For the first time in over a year, foreign investors outperformed domestic investors in monthly trade value—a rare occurrence on the NGX.
For Q1 2025, the NGX reported N2.232 trillion in total transactions, of which N814.05 billion (36.47%) came from foreign investors and N1.41798 trillion (63.53%) from domestic participants.
This compares to Q1 2024, when foreign trades made up just 13.77% of the market, and domestic trades accounted for 86.23%, confirming that Nigeria’s equities market is becoming more sensitive to external investor flows.
What you should know
The erratic movement in foreign portfolio flows is happening against the backdrop of macroeconomic reforms and exchange rate volatility.
Since mid-2023, the Central Bank of Nigeria (CBN) has embarked on FX liberalization and interest rate tightening to curb inflation and attract foreign capital.
However, the volatility of the naira—exemplified by its depreciation from N1,492.49/$1 in February to N1,536.82/$1 in March—alongside inflationary pressures, has raised questions around the sustainability of capital inflows.
In March 2025, Nigeria’s headline inflation rose to 24.23%, reversing the dip caused by the recent Consumer Price Index (CPI) rebasing in February, which initially slowed inflation to 23.18%.
The March uptick was driven by rising prices in food and transport, influenced by higher logistics costs and exchange rate pressures. The rebound in inflation underlines the fragile consumer environment, even as reforms are underway.
Some foreign investors may be engaging in speculative trades, entering the market during moments of local currency strength and exiting when depreciation resumes. Others may be cautious about Nigeria’s fiscal consolidation efforts and the effectiveness of its monetary policies in stabilizing the macroeconomic environment.
The spike in foreign transactions—especially via block trades—could either reflect renewed institutional interest in Nigeria’s capital market or signal short-term positioning driven by currency speculation and arbitrage.
While reforms have made Nigerian assets more attractive on paper, the consistency and clarity of policy execution will be crucial in sustaining investor confidence.
The CBN’s ability to stabilize the FX market, reduce inflation, and ensure liquidity will be closely watched in the months ahead.
With domestic investors still dominant but increasingly cautious, the question for Q2 2025 will be whether foreign interest can be sustained or if March was merely a flash in the pan.