Hot SourceNume Ekeghe
Nigeria’s investment climate is showing signs of renewal, as analysts at FSDH Capital and Cordros Capital forecast improved capital inflows, stronger bond market performance, and gradual exchange rate stability in the second half of 2025.
Their optimism follows the data showing a sharp recovery in foreign portfolio investment (FPI), which surged to $5.46 billion in Q1 2025, up from $1.05 billion in the same period last year. The rebound, they said, reflects growing investor confidence spurred by recent FX reforms and tight monetary policy.
According to FSDH, “Foreign capital inflows have gradually improved, particularly in Q1 2025, where foreign portfolio investment increased to $5.46 billion compared to $1.05 billion in Q1 2024. “Foreign inflows were driven by improved investor sentiment on the back of FX market reforms, and attractive fixed income yields, particularly from the CBN’s OMO bills.
Cordros Capital, in its 2025 Mid-Year Outlook, echoed similar views, stating: “We expect that sustained FX reforms, monetary policy tightening, and favourable yields will continue to support foreign investors’ participation in Nigeria’s capital markets.”
Fixed-income securities particularly sovereign bonds and OMO bills have become the most attractive assets for both local and foreign investors.
FSDH noted that elevated real interest rates following successive rate hikes by the Central Bank of Nigeria (CBN) have helped Nigeria stand out among frontier markets.
Cordros affirmed: “We maintain a bullish outlook on the fixed income market, driven by anticipated yield moderation and relatively stable inflation in H2 2025.”
The firm projected a total market return of 20.6 per cent for the year, underscoring the strength of the fixed-income rally.
The analysts also highlighted a gradual stabilisation of the naira, supported by increased CBN intervention, rising autonomous inflows, and improved liquidity in the official market.
FSDH added: “The return of the CBN to the FX market as a regular supplier, in addition to improved diaspora remittances and autonomous inflows, has supported FX liquidity.”
The narrowing spread between the official and parallel market rates, they said, is a sign that reforms are beginning to take root.
Though challenges persist especially inflation, fiscal pressures, and global volatility—analysts agree that Nigeria is beginning to see the early rewards of difficult but necessary reforms.
