Nigeria recorded a net foreign portfolio investment (FPI) inflow of N161.05 billion into equities in 2025, pointing to a cautious but improving foreign risk appetite amid persistent market volatility and macroeconomic uncertainty.
Data from the Nigerian Exchange show that total foreign equity inflows for the year reached N1.40 trillion, marginally higher than total outflows of N1.24 trillion, resulting in a modest positive net position. While the outcome represents a recovery from the previous year, the underlying flow pattern highlights fragile and uneven foreign participation.
With the exception of September, monthly net inflows were largely subdued. March ended almost flat with a net inflow of N0.05 billion, while May (N13.31 billion), June (N6.33 billion), and August (N18.47 billion) provided incremental support. Even August’s inflow—one of the stronger months—was still less than one-tenth of September’s surge, underscoring the skewed nature of the annual performance.
Recovery from 2024 outflows, but still fragile
The positive net inflow in 2025 marked a clear turnaround from 2024, when foreign portfolio outflows of N455.62 billion exceeded inflows of N396.41 billion, resulting in a net outflow of N59.21 billion. However, the recovery remains structurally weak, driven more by episodic large trades than broad-based foreign confidence.
In December 2025, foreign transaction values jumped sharply, largely due to block trades. Despite gross inflows of N223.79 billion and outflows of N234.30 billion, the month closed with a net outflow, indicating that heightened activity did not translate into sustained net buying.
Overall foreign portfolio activity expanded significantly in 2025. Inflows rose 254.24% year-on-year, while outflows increased 172.86%, reflecting stronger two-way trading rather than one-directional capital inflows. Total foreign portfolio transactions climbed to N2.65 trillion, more than tripling the N852.03 billion recorded in 2024, a 210.72% year-on-year increase.
A year dominated by profit-taking
For much of 2025, foreign flows were characterised by profit-taking and tactical exits. Net outflows were recorded in January, February, April, July, October, November, and December, suggesting that foreign investors were frequently selling into rallies rather than building long-term exposure.
July stood out with a sharp net outflow of N44.99 billion, followed by sustained losses in November (N36.66 billion) and December (N10.51 billion). This pattern reflects continued sensitivity to equity valuations, foreign exchange dynamics, and broader macroeconomic risks, prompting investors to lock in gains.
September skewed the full-year result
The positive net inflow for 2025 was almost entirely driven by September, which alone contributed N263.30 billion—more than the total net inflow for the entire year. During the month, foreign inflows surged to N325.46 billion, while outflows were contained at N62.16 billion, pointing to major block trades, index rebalancing, or institutional portfolio reallocations.
Without September’s exceptional performance, the year would have closed with a net outflow, highlighting the fragile foundation of foreign investor confidence in Nigerian equities.
What the flow pattern tells us
Foreign equity flows in 2025 reflect selective, event-driven engagement rather than long-term conviction investing. While equities benefited indirectly from foreign exchange reforms and improved price discovery, participation remained tactical and short-term.
High domestic interest rates kept fixed-income instruments more attractive, positioning equities as a secondary option for foreign investors. Global liquidity conditions and frontier-market rotations enabled brief inflows, but competition from other frontier markets limited their scale and durability.
Although tax reforms and fiscal signalling helped anchor medium-term confidence, they were not sufficient to generate sustained foreign equity inflows.
Bottom line: Nigeria’s positive net FPI position in 2025 is encouraging but remains structurally weak, heavily reliant on isolated large inflows. Converting episodic foreign participation into durable long-term capital will require deeper macroeconomic stability, clearer FX policy direction, and stronger earnings visibility across listed companies.
Emmanuel Bassey is a Financial Expert that has worked in the Banking and Finance Industry for over 15+ years across different banks in Nigeria
