Nigeria’s capital market witnessed a dramatic surge in foreign portfolio investment (FPI) in July 2025, with inflows hitting N1.81 trillion, a 133.09% leap from N778.65 billion in June.
The latest data from the Nigerian Exchange (NGX), compiled from custodians and market operators, also reveals a year-on-year increase of 269.19% compared to N491.61 billion recorded in July 2024.
Cumulatively, total FPI between January and July 2025 stood at N6 trillion, almost double the figure for the same period last year, marking one of the strongest seven-month performances on record.
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Domestic Versus Foreign Flows
While foreign participation rose significantly, domestic investors continued to dominate market activity. The NGX report showed that domestic transactions in July 2025 jumped to N1.66 trillion, representing a 161.07% increase from N639.34 billion in June.
Within this, institutional investors drove the bulk of trading, outperforming retail investors by 38%. Institutional activity surged by 216.03%—from N364.71 billion in June to N1.15 trillion in July—while retail transactions climbed by 88.07%, moving from N274.63 billion to N516.50 billion in the same period.
On the foreign side, transactions totaled N145.95 billion, up 4.76% from N139.31 billion in June. However, foreign inflows of N50.4 billion were eclipsed by outflows of N95.4 billion, highlighting that while investors are engaging in the Nigerian market, many are still pulling capital out at a faster pace than they are committing.
Year-to-Date Foreign Portfolio Trends
From January to July 2025, total foreign portfolio flows reached N1.28 trillion, more than double the N598 billion recorded in the same period of 2024. A breakdown shows that inflows have nearly tripled to N609.73 billion, compared with N266.64 billion in 2024, while outflows rose to N671.56 billion, from N331.36 billion a year earlier.
This sharp increase indicates stronger engagement, but it also underscores the cautious stance of foreign investors who continue to exit with significant capital despite the attraction of Nigerian equities.
In historical perspective, this year’s FPI is substantially higher than in preceding years: N185.62 billion in 2023, N301.37 billion in 2022, and N262.85 billion in 2021. When combined with N4.7 trillion from domestic transactions, total activity in the first seven months of 2025 reached N6 trillion.
Drivers Behind the Surge
Several factors are fueling this unprecedented wave of trading. Analysts point to the performance of the All-Share Index (ASI) as a critical driver. The index delivered a strong return of 37.7% in 2024 and has already gained over 37% in 2025, making Nigerian equities one of the most attractive across emerging markets.
A more stable foreign exchange market—after years of volatility—has also played a role in calming investor concerns. Additionally, a relatively predictable inflation outlook has reassured market participants that risks, while still present, are more manageable than in previous cycles.
However, the sharp rise in FPI activity reflects both renewed confidence and persistent caution. On one hand, higher inflows demonstrate that global investors are finding Nigerian assets increasingly attractive amid reforms, index gains, and a push for macroeconomic stability. On the other hand, the fact that outflows continue to exceed inflows suggests that confidence remains fragile, with investors often engaging in short-term speculative plays rather than committing to long-term holdings.
This duality has long defined Nigeria’s relationship with foreign portfolio capital. Unlike foreign direct investment (FDI), which signifies a deeper and longer-term commitment to the economy, portfolio inflows tend to be hot money—quick to enter during periods of optimism but equally quick to exit during episodes of uncertainty.
Nigeria’s FPI and Market Story
Nigeria’s FPI story echoes broader emerging market patterns where shifts in U.S. interest rates, oil prices, and global risk sentiment play critical roles. The country has often seen boom-and-bust cycles in capital inflows, with surges in periods of relative stability followed by sharp exits during crises, such as the oil price crash of 2014–2016 or the FX market turmoil of 2020.
The current surge to N1.81 trillion in July alone suggests a level of optimism not seen in over a decade, but the persistence of high outflows serves as a reminder that Nigeria’s investment case still hinges on policy credibility, FX liquidity, and structural reforms.
Looking ahead, analysts say sustaining this momentum will require continued efforts to improve the business environment, strengthen fiscal stability, and maintain a transparent FX regime. If these conditions hold, Nigeria could gradually shift from being merely a target for speculative inflows to a more stable investment destination.