Foreign portfolio investment (FPI) into Nigeria’s equities market dropped sharply by 92.39% in April 2025, with inflows plummeting to ₦26.64 billion, a steep fall from the ₦349.97 billion recorded in March.
The dramatic decline follows the absence of major block trades that buoyed March activity and comes amid growing global economic uncertainty. Rising geopolitical risks, especially the fallout from sweeping U.S. tariffs, have intensified investor caution undermining foreign interest in emerging markets like Nigeria.
Data from the Nigerian Exchange (NGX) shows that total foreign transactions fell by 90.99%, from ₦699.89 billion in March to ₦63.07 billion in April, marking a significant reversal in foreign participation.
Foreign Appetite Fades as Outflows Outpace Inflows
In April, foreign inflows stood at ₦26.64 billion, while outflows totaled ₦36.43 billion, resulting in a net capital outflow of ₦9.79 billion for the month. Foreign activity made up just 13.08% of total market transactions, a sharp fall from 62.74% in March, reflecting heightened investor retreat from risk.
This shift underlines the fragile nature of recent gains and signals that foreign capital remains sensitive to global macroeconomic headwinds and local market volatility.
Total Market Activity Slumps by Over 50%
Overall market activity also took a hit. Total transaction value on the NGX dropped 56.79%, falling from ₦1.115 trillion in March to ₦482.04 billion in April.
Yet, on a year-on-year basis, the market still showed some resilience posting a 39.22% growth compared to ₦346.23 billion in April 2024.
So far in 2025, trade volumes have reached ₦2.714 trillion, up 43.3% from ₦1.894 trillion during the same period in 2024, driven largely by improved liquidity in the earlier months.
Domestic Investors Remain Market Pillars
Domestic players continued to dominate the equities market, accounting for ₦418.97 billion or 86.92% of total trades in April a modest increase from ₦415.62 billion in March.
Within this group:
- Institutional investors increased their activity by 8.77%, from ₦218.50 billion to ₦237.66 billion, indicating confidence from pension funds, mutual funds, and asset managers.
- Retail investor participation, however, dropped by 8.02%, from ₦197.12 billion to ₦181.31 billion, signaling rising caution among individuals.
Institutional trades outpaced retail by 14% in April, continuing a trend observed throughout the year. As of April, institutional investors have traded ₦976.66 billion, compared to ₦860.29 billion by retail investors.
Foreign Sentiment Still Net Negative in 2025
Despite the robust spike in foreign interest seen in March, the year-to-date foreign balance remains negative. Between January and April, foreign inflows totaled ₦420.32 billion, while outflows hit ₦456.80 billion, resulting in a net outflow of ₦36.48 billion.
Year-to-date, foreign investors have accounted for 32.32% of total market activity, compared to 67.68% by domestic investors. This reflects a notable shift from 2024, when foreign trades made up just 13.77% though the sustainability of this recent uptick is in question.
Long-Term Trend: Domestic Investors Hold the Line
Historical data over the last 18 years highlights the long-standing dominance of local investors. Domestic transactions have grown from ₦3.556 trillion in 2007 to ₦4.735 trillion in 2024 a 33.15% increase. Foreign trades rose 38.31% over the same period, from ₦616 billion to ₦852 billion.
In 2025 so far, domestic trades have totaled ₦1.837 trillion, while foreign trades reached ₦877.12 billion, underscoring the continued reliance on domestic institutional support to keep the market afloat.
Tariffs, FX Volatility and Policy Uncertainty Weigh on Outlook
April’s market downturn came in the wake of renewed global volatility, triggered by U.S. President Donald Trump’s announcement of broad-based tariffs, including a 14% levy on Nigerian exports.
The tariffs, which apply across sectors beyond oil, disrupted trade flows and deepened uncertainty for emerging markets. In response, the Central Bank of Nigeria (CBN) injected $200 million into the forex market to stabilize the naira, which had faced renewed pressure.
Nigeria’s economic management team also convened to evaluate the long-term implications and develop strategies to mitigate the impact of these global shocks. Trump’s tariffs, which exclude only China from a 10% baseline levy, are expected to remain in place until July 8, 2025, as Washington seeks to renegotiate trade terms with over 75 countries.
Looking Ahead: Reform is Critical
With macroeconomic headwinds intensifying, foreign exchange volatility lingering, and global financial conditions tightening, Nigeria’s capital market remains vulnerable to external shocks.
To attract and retain meaningful foreign participation, analysts stress the need for structural reforms, policy stability, and a predictable regulatory environment. Until then, domestic institutional investors will continue to serve as the primary stabilizing force in the Nigerian equities market.
