In a concerning trend for Nigeria’s capital market, foreign investors withdrew a staggering N455.62 billion from the Nigerian stock market in 2024, significantly outpacing total inflows of N396.41 billion. This net outflow of N59.21 billion highlights the growing reluctance of foreign investors to commit to Nigerian equities, despite efforts by the Central Bank of Nigeria (CBN) to stabilize the naira and improve economic conditions.

The data, sourced from the Nigerian Exchange Limited’s (NGX) Domestic and Foreign Portfolio Investment Report, reveals that foreign participation in the stock market accounted for just 15.25% of total transactions, while domestic investors dominated with N4.73 trillion, representing 84.75% of market activity. This imbalance underscores the challenges facing Nigeria’s capital market, including currency volatility, inflation, and capital control concerns, which have eroded foreign investor confidence.

Monthly Breakdown of Foreign Outflows and Inflows
The report provides a detailed monthly breakdown of foreign transactions, showing significant fluctuations in investor sentiment throughout the year:

• January 2024: Outflows of N37.33 billion surpassed inflows of N15.78 billion, resulting in a net outflow of N21.55 billion.
• February 2024: Outflows rose to N40.88 billion, while inflows increased to N24.93 billion, narrowing the net outflow to N15.95 billion.
• March 2024: Inflows surged to N52.66 billion, exceeding outflows of N41.60 billion and marking the first month of net inflows.
• April 2024: Outflows jumped to N78.25 billion, the highest monthly figure, while inflows stood at N42.58 billion, leading to a net outflow of N35.67 billion.
• May 2024: Outflows remained high at N69.41 billion, with inflows increasing to N54.87 billion, resulting in a net outflow of N14.54 billion.
• June 2024: Outflows declined to N43.94 billion, while inflows fell to N38.25 billion, leaving a net outflow of N5.69 billion.
• July 2024: Outflows dropped to N19.95 billion, the lowest in the year, while inflows stood at N37.57 billion, creating a net inflow of N17.62 billion.
• August 2024: Outflows increased slightly to N24.38 billion, while inflows dropped to N33.09 billion, resulting in a net inflow of N8.71 billion.
• September 2024: Outflows climbed to N30.15 billion, while inflows sharply declined to N11.26 billion, leading to a net outflow of N18.89 billion.
• October 2024: Outflows declined to N14.15 billion, while inflows stood at N33.31 billion, creating a net inflow of N19.16 billion.
• November 2024: Outflows rose slightly to N15.09 billion, while inflows dropped to N25.85 billion, resulting in a net inflow of N10.76 billion.
• December 2024: Outflows surged to N40.49 billion, while inflows were N26.26 billion, leading to a net outflow of N14.23 billion.

Overall, foreign outflows exceeded inflows in seven out of twelve months, reflecting persistent uncertainty among foreign investors.

Domestic Investors Dominate Market Activity
While foreign investors retreated, domestic investors played a pivotal role in sustaining market activity. Total domestic transactions reached N4.735 trillion, more than five times the total foreign transaction value. Retail investors accounted for N2.306 trillion (48.72% of domestic trades), while institutional investors led with N2.429 trillion (51.28%).

Institutional participation grew by 18.63% year-on-year, with a notable surge in December 2024, when transactions increased by 97.09% to N406.04 billion. Retail activity also grew by 11.57%, indicating resilience among local investors despite economic challenges.

Total Market Transactions and Exchange Rate Stability
Total transactions on the Nigerian stock market in 2024 amounted to N5.587 trillion, a 56.2% increase from N3.578 trillion in 2023. This growth was largely driven by domestic activity, particularly from institutional investors.

The naira showed relative stability in the latter part of the year, appreciating by 7.67% from N1,663.39/$inNovember2024toN1,535.81/$ in December 2024. However, this improvement did not immediately translate into higher foreign investment, as investors remained cautious due to inflation, monetary policy adjustments, and capital repatriation concerns.

2025 Begins with Continued Foreign Outflows
The trend of foreign withdrawals persisted into 2025, with investors pulling out N45.85 billion in January, significantly overshadowing inflows of N25.66 billion. This resulted in a net outflow of N20.19 billion, reinforcing concerns over declining foreign participation.

Total equity transactions on the NGX fell by 9.89% from N673.66 billion in December 2024 to N607.05 billion in January 2025, reflecting subdued investor sentiment. On a year-on-year basis, transactions dropped by 6.83% from N651.52 billion in January 2024.

Expert Insights and Recommendations
Industry experts attribute the foreign investor exodus to the volatility of the naira, high inflation, and uncertainties surrounding Nigeria’s economic policies. They emphasize that sustained policy consistency, improved capital market regulation, and clear foreign exchange (FX) repatriation frameworks are essential to restoring investor confidence.

The dominance of domestic investors, while commendable, underscores the need for Nigeria to attract foreign capital to support long-term economic growth. Addressing structural challenges, such as infrastructure deficits and security concerns, will be critical in creating a more favorable investment climate.

Conclusion
The significant withdrawal of foreign funds from the Nigerian stock market in 2024 highlights the challenges facing the country’s capital market. While domestic investors have stepped up to sustain market activity, the lack of foreign participation poses risks to Nigeria’s economic recovery and growth prospects.

To reverse this trend, policymakers must prioritize reforms that enhance transparency, stability, and investor confidence. By addressing the underlying issues driving foreign outflows, Nigeria can position itself as an attractive destination for global capital and unlock the full potential of its capital market.