Recent reforms by Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), are beginning to yield positive results as foreign investors increasingly turn their attention to Nigeria in 2025. During an investors’ call with a leading international bank heavily invested in Africa, senior officials expressed strong confidence in the Nigerian market, emphasizing a bullish investment strategy. “Sell everything and buy Nigeria, everything,” a senior bank official declared.
Investor confidence began to surge when the CBN implemented long-awaited foreign exchange (FX) market reforms aimed at improving transparency and liquidity. Key measures include the Electronic Foreign Exchange Matching System (EFEMS) which were introduced in December 2024, this system ensures more transparent pricing for the dollar. The higher interest rates on treasury bills attracts increased foreign capital inflows and stabilizes the naira and the revised policies on foreign exchange transactions all helped. These policies have significantly reduced naira volatility, increasing the attractiveness of Nigerian securities to foreign investors and global banks.
On Friday, the naira reached an eight-month high of ₦1,474.78/$ at the official foreign exchange market, marking a turning point for investors and manufacturers who have faced economic instability in recent years. Additionally, market interest rates have been on an upward trajectory since 2024. Currently, one-year treasury bills yield 27% and seven- and ten-year bonds were auctioned last week at 22.50%.
This trend is expected to continue through the first half of 2025, further solidifying Nigeria’s investment appeal.
In a recent report titled ‘Emerging Market Frontier Local Markets Compass’, J.P. Morgan acknowledged that Nigeria’s reforms have significantly enhanced the attractiveness of its securities. “We stay long on Nigeria T-bills, as reform momentum has started to bear fruit,” the report stated.
The financial institution also predicted a strong performance for the naira in 2025, highlighting its position as one of the best-performing frontier currencies this year.
With the latest reforms, analysts believe Nigeria could be on track for readmission into the JPMorgan Government Bond Index-Emerging Markets (GBI-EM), which tracks local currency bonds in emerging economies such as Brazil, Thailand, Turkey, Peru, and South Africa.
Although Nigeria was removed from the index in 2015 following restrictive forex policies that hindered foreign investors’ ability to participate in the local bond market, she has now met the required conditions. However, her reentry will depend on the demand of her investors. “Everything that needs to be done on Nigeria’s part has been completed. It is now up to investors,” a source familiar with the matter revealed.
The improved investment climate has kicked up a wave of visits from international banks, including J.P. Morgan, marking their first return to Nigeria in five years. “They visited last year to gauge the economic direction. Promises were kept, investments were made, and they saw strong returns. They borrowed at 5% and earned 20% returns with stable forex rates—a compelling success story,” a source disclosed. Reports also indicate that a major investor recently committed nearly $1 billion to Nigeria, reflecting growing global confidence in the country’s financial market.
The CBN’s decisive reforms are reshaping Nigeria’s economic landscape, attracting foreign capital, enhancing market stability, and restoring investor confidence. With the naira strengthening, higher interest rates, and renewed global interest, 2025 could be a transformative year for Nigeria’s economy.
