Foreign investors have withdrawn a net N266.07 billion from Nigeria’s equities market in the first seven months of 2026, marking a sharp deterioration from the N22.68 billion net outflow recorded during the same period in 2023.
Data from the Nigerian Exchange Limited (NGX), cited by Vanguard, showed that foreign portfolio investment remained in negative territory throughout the three-year period, with the gap between foreign inflows and outflows becoming particularly pronounced in 2026.
Between January and July 2023, foreign investors brought N81.47 billion into the Nigerian equities market, while withdrawals stood at N104.15 billion, producing a net outflow of N22.68 billion.
The situation worsened in 2024. Foreign inflows increased to N266.64 billion, but outflows rose even faster to N331.36 billion, leaving a net deficit of N64.72 billion.
By July 2025, foreign investors had brought in N609.73 billion, while withdrawals reached N671.56 billion, resulting in a net outflow of N61.83 billion.
The trend took a significant turn for the worse in 2026. From January through July, foreign inflows stood at N513.36 billion, compared with outflows of N779.43 billion. This translated into a net outflow of N266.07 billion.
Compared with the first seven months of 2023, foreign inflows had grown by more than 530 per cent, while outflows increased by approximately 648 per cent.
Analysts say the figures indicate that Nigeria’s challenge may have shifted from simply attracting foreign capital to creating conditions that encourage international investors to keep their funds in the market.
They identified factors such as profit-taking, portfolio adjustments and concerns over Nigeria’s broader macroeconomic and investment environment as possible reasons behind the growing outflows.
2026 sees major increase in foreign outflows
The N266.07 billion net outflow recorded by July 2026 was more than four times the N61.83 billion recorded during the corresponding period of 2025 and about 11.7 times the N22.68 billion reported in 2023.
This occurred despite significant growth in trading activity on the NGX. Total transactions during the first seven months of 2026 reached approximately N11.98 trillion, compared with N6.01 trillion during the same period in 2025.
Much of the increase in market activity, however, was driven by domestic investors.
Monthly figures showed that foreign withdrawals exceeded inflows throughout the first seven months of 2026.
In January, foreign inflows stood at N47.86 billion, while outflows were N66.28 billion, resulting in a deficit of N18.42 billion.
Foreign inflows increased by 39.4 per cent month-on-month in February to N66.71 billion, while outflows rose by 9.1 per cent to N72.32 billion. The resulting deficit narrowed to N5.61 billion.
March recorded the biggest movements. Inflows climbed by 60.5 per cent to N107.05 billion, but outflows surged by 151.3 per cent to N181.77 billion, producing the year’s largest monthly deficit of N74.72 billion.
In April, inflows dropped by 15.1 per cent to N90.84 billion, while outflows fell by 13.7 per cent to N156.94 billion. The deficit stood at N61.10 billion.
May brought some relief as outflows fell sharply by 38.8 per cent to N96.01 billion, while inflows stood at N87.60 billion, reducing the deficit to N8.41 billion.
However, the improvement did not last. June saw outflows rise by 19.9 per cent to N115.08 billion, while inflows declined by 18.1 per cent to N71.71 billion. The monthly deficit consequently widened to N43.37 billion.
July recorded the lowest foreign inflow of the year at N41.59 billion, representing a 42 per cent decline from June. Outflows also fell by 20.9 per cent to N91.03 billion, leaving a deficit of N49.44 billion.
Adonri: Nigeria still needs foreign investors
The Managing Director of Highcap Securities Limited, David Adonri, said Nigeria continues to require greater foreign participation in its capital market because of the wider economic benefits that such investment can generate.
According to him, although Nigerian institutional investors, particularly Pension Fund Administrators, now have the capacity to provide substantial liquidity, foreign investors remain important to the development and functioning of the market.
Adonri also argued that the increased presence of local investors could make foreign participation appear smaller as a percentage of total market activity, even if foreign investors have not necessarily reduced their overall involvement.
He noted that some of the large outflows could represent foreign investors taking profits and repatriating dividends following the prolonged rally in Nigerian equities.
He also pointed to the Central Bank of Nigeria’s release of previously trapped funds owed to foreign investors as another factor that could have contributed to the movement of capital out of the country.
Adonri explained that unlike foreign direct investment, foreign portfolio investment is highly mobile and can quickly move between countries and markets depending on investment opportunities.
He maintained that a profitable, liquid and secure capital market, combined with manageable sovereign risk, would make foreign investors less likely to withdraw their funds suddenly.
He further warned that domestic investors may not be able to support the capital market on their own, stressing the need for continued injections of fresh capital from international investors.
CIS President raises liquidity concerns
The President of the Chartered Institute of Stockbrokers, Fiona Ahimie, described the widening foreign outflow as a concern, saying it suggests that international investors have yet to develop enough confidence to hold Nigerian equities over the long term.
She noted that reduced foreign participation could also deprive Nigeria of an important source of foreign exchange and market liquidity.
However, Ahimie said the development should not be interpreted as a collapse of the Nigerian equities market, pointing out that domestic investors have increased their participation and helped maintain strong trading activity.
She stressed that the larger concern is market depth because foreign investors typically bring substantial pools of capital and provide liquidity for major stocks.
Ahimie said policymakers should focus on making Nigeria attractive enough for international investors to remain in the market, rather than merely creating conditions that encourage them to enter.
She observed that foreign exchange conditions have improved, with the naira relatively stable, better FX liquidity and external reserves exceeding $54 billion.
However, she said uncertainty surrounding capital gains tax remains a concern for foreign investors and needs to be resolved to provide greater clarity for investment planning.
According to her, the key issue now is the quality and predictability of investment returns. While inflation remains an important consideration, she said investors are increasingly concerned about the real value of returns generated from Nigerian equities.
She called for greater policy consistency, deeper market liquidity, improved corporate governance, predictable regulation and more efficient market infrastructure.
On July’s particularly low foreign participation, Ahimie said the 5.60 per cent recorded during the month was the lowest level of the year.
She attributed the decline partly to profit-taking following the strong performance of Nigerian equities and the appreciation of the naira, which may have provided some foreign investors with an opportunity to lock in returns.
She also pointed to uncertainty surrounding Nigeria’s transition to T+1 settlement and FTSE Russell’s decision to place the country’s frontier-market reclassification under further review.
Foreign investors moving towards fixed income – Olayinka
Investment analyst Tajudeen Olayinka argued that foreign investors have not completely abandoned Nigeria’s capital market.
Instead, he said many international investors have redirected more of their funds towards fixed-income instruments, particularly Federal Government bonds and Treasury bills, because of the attractive yields available in that segment.
Olayinka explained that foreign portfolio investors typically move funds across global markets in search of better returns relative to the risks involved, with short-term investment opportunities often influencing their decisions.
He said investors are more likely to remain in a market when they consider the investment environment safe and believe resources are being allocated efficiently.
He added that foreign participation remains important to Nigeria because of the liquidity international investors provide, including its impact on the foreign exchange market.
According to Olayinka, foreign portfolio investors have contributed partly to the recent stability of the naira exchange rate.
He stressed that Nigeria should maintain a healthy balance between domestic and foreign portfolio investors, rather than becoming overly dependent on either group.
Source: Vanguard
