Nigeria’s Equities Market Faces 90.6% Drop in Foreign Inflows Amid Forex and Economic Challenges

Amid prolonged forex illiquidity, inflation, high-interest rates, and other macroeconomic challenges, Nigeria’s domestic equities market has experienced lackluster interest as total foreign inflows (TFI) decline by 90.6% in the last decade. According to the Nigerian Exchange Limited (NGX) report, total foreign inflow dropped from N43 billion in 2013 to N4.6 billion by March 2023, while domestic transactions surged by 93.7%.

Stakeholders express concern over foreigners’ apathy in the equities market and call for an all-inclusive growth approach, aligning policy choices with monetary, fiscal, trade, and investment measures. The naira’s depreciation and unclear economic policies are cited as key reasons for foreign portfolio investors’ reluctance to engage in the Nigerian market.

Amaechi Egbo, an independent investor, highlights the need for appropriate policies to attract foreign investors back to the market. Forex illiquidity remains a major concern, and Dr. Muda Yusuf of the Centre for the Promotion of Private Enterprise (CPPE) stresses the importance of a sustainable intervention framework to manage foreign exchange market volatility and restore investor confidence.

The report reveals a backlog of unmet foreign exchange demand, leading to pressure on investors and exporters. The Central Bank of Nigeria’s (CBN) intervention in the forex market has slowed down, raising concerns among economic players. Dr. Yusuf urges the CBN to exercise better oversight on forex demands to protect the market from speculative assault and illicit capital outflows.