Nigeria’s Investment Climate Gains Global Confidence
Leading financial analysts worldwide have expressed optimism about Nigeria’s investment landscape, citing significant improvements that have made the country an attractive destination for foreign investors. This shift is largely attributed to the Central Bank of Nigeria’s (CBN) recent economic reforms, which are positively influencing multiple sectors of the economy.
These policy changes have bolstered investor confidence, leading to a stock market surge and a reduction in bond yields. As a result, Nigeria’s sovereign risk spread has declined to its lowest level since January 2020, effectively eliminating the financial risks accumulated during the pandemic.
Currency Reforms and Economic Stability
Despite global uncertainties, Nigeria has remained resilient, drawing foreign capital due to currency reforms and strategic economic measures. Portfolio manager at East Capital, Emre Akcakmak, noted that Nigeria’s economic revival is evident as long-awaited policy adjustments take effect.
“Key reforms include enhanced currency liquidity, mechanisms for seamless profit repatriation by investors, and maintaining the naira’s stability,” Akcakmak explained. “The CBN is actively working to prevent sharp currency appreciation to ensure market stability.”
Samir Gadio, head of Africa strategy at Standard Chartered Plc, highlighted that improved structural reforms and better foreign exchange market management have encouraged portfolio inflows. He emphasized that Nigeria’s market is less exposed to global financial risks compared to other emerging economies.
Nigeria’s Sovereign Bonds and Market Growth
Investor confidence in Nigeria’s financial market is evident in the performance of the country’s Eurobonds. The $1.5 billion Eurobond maturing in 2034 has witnessed a decline in yield to 9.69%, marking its lowest point since December. Additionally, the most recent domestic debt auction saw a remarkable oversubscription, underscoring the strong demand for Nigerian assets.
Economists predict that as Nigeria exits the most challenging phase of its economic reforms in 2025, businesses will benefit significantly. Bismarck Rewane, Non-Executive Director of Parthian Partners, forecasted that Nigeria’s economy would begin to rebound, stressing that effective policy execution is crucial for sustainable growth.
Overcoming Economic Challenges
Rewane pointed out that while Nigeria’s currency fundamentals suggest a stronger naira, proper management of FX policies is essential. He identified inconsistencies in policy implementation and structural reforms as obstacles to achieving economic stability.
Revenue generation alone is insufficient; investment remains a key driver of economic expansion. Rewane underscored the importance of confidence, transparency, and sound policy decisions in attracting capital inflows.
Persistent challenges such as inadequate power supply and the lack of transparency in the oil and gas industry require urgent structural reforms. Addressing these issues will further enhance investor confidence and economic stability.
Digital Innovation and Infrastructure Investment
Professor Olayinka David-West, Associate Dean at Lagos Business School, advocated for a “digital-first approach” in economic planning. He emphasized leveraging technology and artificial intelligence (AI) to improve fiscal discipline and strategic decision-making.
Meanwhile, the Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Chinyere Almona, identified high energy costs as a major inflationary factor. She stressed the need for a reliable power supply to ensure price stability.
Olufemi Shobanjo, CEO of NGX Regulation Limited, highlighted the role of liquidity in capital markets, emphasizing the need for policies that build investor confidence.
Key Indicators of Economic Growth
The Nigerian economy is showing promising signs, with government revenue increasing and foreign reserves surpassing $40 billion. FirstBank Group CEO, Olusegun Alebiosu, pointed out that forex market stability and increased competition in the oil sector have contributed to economic optimism.
The revival of the Port Harcourt and Warri refineries further supports the positive economic outlook. Additionally, the government’s proposed N49.7 trillion 2025 budget is expected to stimulate growth, with a projected GDP expansion rate of 3.68%.
Tackling Inflation and Strengthening Financial Stability
The CBN’s monetary policies have played a vital role in addressing inflationary pressures. In 2024, Nigeria experienced a 34.6% inflation rate—the highest in three decades—leading to increased living costs and financial constraints for businesses.
To counter inflation, the CBN’s Monetary Policy Committee (MPC) raised the benchmark Monetary Policy Rate (MPR) to 27.5%. This strategic move aimed to stabilize the economy while addressing liquidity concerns.
Foreign Exchange Market and Naira Stability
The introduction of the Electronic Foreign Exchange Matching System (EFEMS) has helped restore stability in Nigeria’s forex market. The naira has appreciated against the dollar, boosting investor confidence in the currency’s long-term sustainability.
CBN Governor Olayemi Cardoso emphasized that his administration prioritizes exchange rate stability, inflation control, and financial sector resilience. Under his leadership, the central bank has also initiated banking industry recapitalization to strengthen financial institutions and improve access to credit for Micro, Small, and Medium Enterprises (MSMEs).
The Road Ahead for Nigeria’s Economy
Financial analysts at Commercio Partners noted that Nigeria’s financial market has benefited from CBN’s revised foreign exchange policies. These regulations promote transparency, ensure compliance, and foster ethical trading practices.
Managing Director of Afrinvest West Africa Limited, Ike Chioke, attributed naira recovery to improved market confidence following the successful launch of EFEMS. The clearance of a $7 billion forex backlog and resumed sales of Open Market Operation (OMO) bills have further supported the currency’s stability.
Conclusion: A New Era of Economic Growth
As Nigeria continues implementing structural reforms, foreign investor interest is expected to rise. With strategic policy execution, stable exchange rates, and robust capital inflows, the country is well-positioned for sustainable economic growth.
For more insights on Nigeria’s evolving financial landscape, read the full analysis on Bloomberg and Financial Times.
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