Financial analysts from around the world have expressed optimism about Nigeria’s improved investment climate, which has paved the way for an influx of foreign capital. These developments are largely attributed to the Central Bank of Nigeria’s (CBN) financial reforms, which are now benefiting key sectors of the Nigerian economy.
The impact of these reforms has been significant, with Nigeria receiving positive feedback from international investors, reflected in rising stock prices and lower bond yields. These measures have helped restore investor confidence, despite challenges such as the global trade tensions during former US President Donald Trump’s administration.
“Nigeria seems to be back in business, with long-awaited economic reforms starting to take shape,” said Emre Akcakmak, a portfolio manager at East Capital. He highlighted the improved liquidity in the currency market, greater freedom for investors to repatriate profits, and the stabilizing of the naira.
Samir Gadio, head of Africa strategy at Standard Chartered Plc, agreed, adding, “The combination of structural reforms, better functioning FX markets, and moderating volatility has likely boosted portfolio inflows. Moreover, Nigeria’s local market shows less correlation with global risk factors than its more liquid emerging market peers.”
In fact, yields on Nigeria’s $1.5 billion eurobond maturing in 2034 have dropped to 9.69%, the lowest since its launch in December 2024, signaling improved investor confidence. A recent domestic debt auction was also oversubscribed, further affirming the positive trend.
According to Bismarck Rewane, Non-Executive Director at Parthian Partners, Nigeria is exiting the most challenging phase of its reform process in 2025. He forecasts the country’s recovery from the toughest part of economic reforms, emphasizing the importance of strategic policy implementation and reforms.
Rewane acknowledged the challenges in the foreign exchange system, stating that while the naira should be stronger based on exchange rate fundamentals, stability will depend on effective management of the FX system. He highlighted the need for investment-driven growth and urged that structural reforms in the energy and oil sectors are vital.
Bright Prospects for 2025
Several experts are optimistic about the economic outlook for 2025. Professor Olayinka David-West of Lagos Business School emphasized the importance of a digital-first approach to improving fiscal discipline, while Chinyere Almona, Director-General of the Lagos Chamber of Commerce and Industry (LCCI), underscored the need for resolving energy issues to control inflation.
Yemi Sadiku, Executive Director of Parthian Group, noted that infrastructure investment is critical to fostering economic growth. Meanwhile, Olusegun Alebiosu, CEO of FirstBank Group, pointed to positive economic indicators such as improved government revenues, a strengthened revenue-to-debt service ratio, and the resurgence of Nigeria’s oil refineries.
The Nigerian government’s proposed N49.7 trillion budget for 2025 is expected to stimulate the economy further, with a projected GDP growth rate of 3.68%.
CBN’s Strategic Initiatives and Reforms
The CBN, under the leadership of Governor Olayemi Cardoso, has made strides to stabilize the exchange rate, curb inflation, and strengthen banks’ capital buffers. The introduction of the Electronic Foreign Exchange Matching System (EFEMS) has enhanced trading transparency and helped alleviate pressure on the naira.
On recapitalization, Cardoso highlighted that the policy aims to ensure that banks are better equipped to support underserved markets, including micro, small, and medium enterprises (MSMEs), by providing more credit. These initiatives also aim to foster financial inclusion by leveraging technology for mobile money and agent banking.
Outlook for the Forex Market
The introduction of EFEMS has improved liquidity and transparency in the forex market. As a result, the naira has strengthened across various market segments, further boosting investor confidence. Analysts at Commercio Partners noted that Nigeria’s revised forex market guidelines have contributed to greater governance and market efficiency.
Ike Chioke, Managing Director of Afrinvest West Africa Limited, attributed the naira’s recovery to a combination of policies such as the clearing of a $7 billion FX backlog and the sale of Open Market Operation bills to foreign portfolio investors at market-reflective rates.
Sustaining Economic Momentum
The CBN’s reforms, including the unification of the exchange rate, have resulted in substantial foreign capital inflows and reduced the need for intervention in the forex market. The floatation of the naira, coupled with the clearing of the FX backlog, has enhanced Nigeria’s appeal to foreign investors.
Upon taking office, Cardoso prioritized strengthening Nigeria’s economic buffers, especially after inflation surged to 27%. He explained that inflation erodes purchasing power and contributes to naira depreciation, posing significant challenges for households and businesses alike.
With the combination of these reforms and policies, Nigeria is on a more stable economic path, with growing confidence in its economic future.
