In a remarkable turnaround, Nigeria’s stock market has witnessed a significant influx of foreign investment in the early months of 2024. After a period of caution due to currency availability issues exacerbated by the Central Bank’s stringent financial regulations, international investors have confidently re-entered the Nigerian market.
The first quarter of 2024 saw foreign investments in Nigerian stocks soar to N93.37 billion, a substantial increase from the N18.12 billion recorded during the same timeframe in the previous year. This marks the most considerable three-month investment surge since 2019.
The Nigerian Exchange Group’s recent data highlights that the bulk of these investments arrived in March, with a record N52.66 billion flowing in, surpassing the combined total of N40.71 billionfor January and February.
This renewed interest can be attributed to the Central Bank of Nigeria’s policy reforms, which have improved liquidity in the foreign exchange market and led to a more market-responsive exchange rate. Additionally, the Central Bank’s efforts to clear the backlog of foreign exchange transactions have bolstered investor confidence, making Nigeria an attractive investment destination once again.
Despite the naira’s devaluation, the uptick in foreign inflows reflects growing investor confidence in Nigeria’s economic prospects. The stock market’s performance has been robust, with a 39.84 percent gain in the first quarter of 2024, driven primarily by local investors.
Industrial goods companies, consumer goods firms, and banks have been at the forefront of this impressive rally.
While there has also been a notable increase in foreign outflows, this is largely seen as a positive sign of the Central Bank’s success in settling previously trapped funds, rather than an indication of deteriorating investor sentiment.