Major financial analysts across the global have expressed optimism that Nigeria’s investment climate has significantly improved, paving way for foreign investors swooping on Nigeria assets.
According to the analysts the development has largely been spurred by the impact of the Central Bank of Nigeria (CBN) reforms in the financial sector now spreading across key sectors of the economy.
The country is now getting a favorable nod from investors, pushing stocks higher and bond yields lower as painful reforms restore confidence.
Already, Nigeria’s sovereign risk spread has fallen to the lowest level since January 2020, erasing the premium accumulated during the pandemic and subsequent strain on its economy.
While US President Donald Trump’s widening trade war has taken emerging markets on a wild ride, Nigeria has quietly held its own, attracting foreign capital reassured by currency reforms and other measures designed to revive the economy of Africa’s most-populous nation.
“Nigeria appears to be back in business as long-awaited economic reforms take shape,” said Emre Akcakmak, portfolio manager at East Capital.
He stated further: “Key measures include improved currency liquidity, leeway for investors to repatriate their profit, and the stable naira.
“We feel the Central Bank of Nigeria will continue to stem any sharp appreciation of the naira to limit profit taking from the fast money community.” “Portfolio inflows have likely been supported by improved confidence amid key structural reforms, better FX market functioning and moderating dollar-naira volatility, as well as the still-robust nominal yield buffer,” said Samir Gadio, head of Africa strategy at Standard Chartered Plc, told Bloomberg.
“Besides, Nigeria’s local market is seen as less correlated with global risk conditions than more liquid EM peers,” he added.
Yields on Nigeria’s $1.5 billion eurobond due in 2034 have declined to 9.69 per cnt, the lowest since its early December launch, and a domestic debt auction was three-times oversubscribed recently, with the Open Market Operation bills allotted at 21.45 per cent versus 22.65 per cent.
Economic prospects turn positive
The Nigeria’s economy and businesses will have so many things to cheer in 2025 and the impact of the economic reforms in FX market, exchange and huge budget outlays begin to pay off for them.
Nigeria’s economy is already exiting the most painful phase of the reform adjustment process in 2025, Non-Executive Director of Parthian Partners, Bismarck Rewane has predicted.
Rewane projected that the economy would begin to recover from the toughest phase of its reform adjustments by 2025, emphasizing the importance of strategic policy implementation and institutional reforms.
He noted that while the fundamentals of Nigeria’s exchange rate indicate that the Naira should be stronger, achieving stability depends on an efficient and effectively managed FX system. He stressed that the primary challenge lies not in the reforms themselves but in their management, citing poorly sequenced policy changes and insufficient structural reforms as significant obstacles.
He underlined the critical role of investment in driving economic growth. “Revenue alone is not enough,” Rewane stated. “Investment is key, but it will be influenced by confidence, transparency, and the right policies.”
He also called attention to persistent challenges such as power supply inefficiencies and the lack of transparency in the oil and gas sector, which require immediate attention through structural reforms.
Rewane said that 2025 is going to be less hard, less painful, less difficult than last year. He said the fact that things were so difficult in 2024, does not in anyway indicate that the difficulties will persist this year.
Associate Dean of Lagos Business School, Professor Olayinka David-West, emphasized the importance of adopting a “digital-first mindset,” advocating for the use of technology and AI to improve fiscal discipline and economic planning.
Director-General /CEO of the Lagos Chamber of Commerce and Industry (LCCI), Chinyere Almona, identified high energy costs as a major driver of inflation and stressed the need to resolve power supply issues to stabilize prices.
CEO of NGX Regulation Limited, Olufemi Shobanjo, harped the role of liquidity in capital markets, emphasizing initiatives that enhance investor confidence and ensure market stability.
Executive Director of Parthian Group, Yemi Sadiku, highlighted the need for an enabling environment to attract infrastructure investment, urging the government to create policies that encourage private sector participation.
As Rewane aptly remarked, “The things outside our control far exceed what we can control, but by addressing these root causes, Nigeria can unlock sustainable growth and economic stability.”
Chief Executive Officer, FirstBank Group, Olusegun Alebiosu said the improving government revenues, improved revenue-to-debt service ratio at 68 per cent and the growth in foreign reserve balances to over $40 billion represent positive indicators for the economy.
He further said: “Early signs such as the stability that characterized the forex market after the introduction of the electronic foreign exchange matching system in December 2024; the emergence of competition on the supply side of our nation’s downstream sector that is leading to falling prices in premium motor spirit (PMS) and the coming back on stream of the Port Harcourt & Warri refineries are indicative that there is, indeed, light at the end of the tunnel for us as a country”.
Alebiosu said the sheer timing of the emergence of these developments has strengthened optimism about the Nigerian economy, especially coming into the new year 2025.
Also, the government’s proposed N49.7 trillion 2025 budget is expected to provide sufficient economic stimulus in view of the lower likelihood for poor budget implementation due to improving government’s revenue position, adding that the projected GDP growth rate of 3.68 per cent for 2025 is a very likely outcome.
He disclosed that due to the impacts of some of the “painful but necessary” reforms that the Government had pursued, inflationary pressures exerted considerable strain on household and corporate incomes in 2024, with the inflation rate reaching a three-decades high of 34.60 per cent in November 2024.
In response, the Central Bank of Nigeria, through its Monetary Policy Committee (MPC), had steadily raised the benchmark Monetary Policy Rate (MPR) to 27.5 per cent in a bid to tame inflationary pressures. The combination of these actions has resulted in significantly higher cost of living/operations and funding for households and corporates.
Also speaking, Founder and Chief Consultant of B. Adedipe Associates Limited, ‘Biodun Adedipe said that pressure in the forex market will continue to drop in the coming months, which will lead to rebound in the naira exchange rate against global currencies.
He said the improvement in local oil production has contributed significantly to reduced pressure in the forex market.
Adedipe said the fundamental problems of developing countries have been reduced food deficit, energy deficit and manufacturing deficit.
He called for an expansive domestic manufacturing, agribusiness and relentless, deliberate and focused export drive in the new year.
Exchange rate stability
The naira broke key resistance levels at the Nigerian Autonomous Foreign Exchange Market as the Central Bank of Nigeria (CBN) began the implementation of the new Electronic Foreign Exchange Matching System (EFEMS).
The platform, addresses long-standing issues of market opacity and inefficiency by facilitating smooth trading and consistency among participants.
In the currency market, the naira appreciated against the dollar across all segments.
CBN Governor, Olayemi Cardoso had at the 2024 Chartered Institute of Bankers of Nigeria (CIBN) dinner held November 29 in Lagos, expressed strong optimism that measures being deployed by his administration will deliver benefits that would be felt by every Nigerian in no distant time.
He said the need for reassurance on the expected outcomes from policy measures being deployed by the CBN was necessitated by the growing pains of Nigerians due to the further deterioration of key macroeconomic variables (notably, inflation and exchange rate) that are within the purview of the monetary policy authority relative to when he assumed office last year September.
Cardoso, over time, prioritized stabilising the exchange rate, curbing inflation, strengthening banks’ capital buffers, and fostering an environment conducive to the success of both businesses and individuals.
Besides, the CBN under Cardoso also initiated banking industry recapitalisation to strengthen capital buffers for banks and redefined Net Open Position ceiling for banks (25 per cent short and zero per cent long on foreign currency) to unlock FX liquidity.
On recapitalization of banks, Cardoso said: “This strategic move ensures that banks are well-capitalized, enabling them to take on greater risks, particularly in underserved markets. With stronger capital bases, banks can provide more loans and financial products to Micro Small and Medium Enterprises (MSMEs), rural communities, and other vulnerable segments that have previously struggled to access formal financial services”.
Cardoso said the recapitalisation policy not only strengthens financial stability but also serves as a catalyst for inclusive growth.
“By enabling banks to extend more credit to MSMEs, we enhance job creation and productivity. Furthermore, with increased capital, banks can invest in technology and innovation, crucial for driving digital financial services such as mobile money and agent banking. These technologies are key to breaking down geographic and economic barriers, bringing financial services to even the most remote areas,” he added.
More views from other stakeholders
Analysts at Commercio Partners said Nigeria’s financial landscape has seen significant developments with the CBN introducing revised guidelines to enhance transparency and governance in the foreign exchange market.
These guidelines emphasize ethical practices, real-time reporting, and regulated interbank trading while mandating compliance from banks, dealers, and BDC operators.
Managing Director, Afrinvest West Africa Limited, Ike Chioke said naira recovery could be attributed to improved market confidence following the successful launch of the EFEMS designed to promote trading transparency.
“Also, the liquidity supply boost provided by Nigeria’s successful pricing of $2.2 billion in Eurobonds earlier last week significantly boosted the exchange rate position against the dollar. We anticipate the Naira to regain more ground against the dollar, driven by aforementioned factors,” he said.
Chioke, listed other key policies of the apex bank that supported naira rally as the clearance of the $7 billion FX backlog and resumed sales of Open Market Operation (OMO) bills to Foreign Portfolio Investors (FPIs) at market reflective rates.
Sustaining battles against inflation
CBN’s policies, including the exchange rate unification, have led to significant foreign capital inflows to the economy while reducing its intervention in the forex market.
The floatation of the naira and the clearing of over $7 billion FX backlog improved the country’s outlook with foreign investors as well as multilateral organizations, like the World Bank describing it as bold intervention to improve the economy’s sustainability in the long run.
Cardoso disclosed that upon assuming office, his leadership prioritized rebuilding Nigeria’s economic buffers and strengthening resilience.
Before he assumed office, inflation, which had surged to 27 per cent, was one of the most pressing challenges, partly driven by excessive money supply growth. While the GDP growth had stagnated at a meagre 1.8 per cent over the previous eight years, money supply expanded rapidly, averaging about 13 per cent growth annually.
This imbalance not only fueled inflation but also contributed to a significant depreciation of the naira. He explained that inflation creates uncertainty for households and businesses, acting as a silent tax by eroding purchasing power and driving up living costs.
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