Nigeria’s capital market has recorded a remarkable 125 per cent growth in market capitalisation since April 2024, rising from about N55 trillion to over N123.93 trillion, the Director-General (DG) of the Securities and Exchange Commission (SEC), Dr Emomotimi Agama, has disclosed.

This was as the Chief Executive Officer of Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, stated that a significant rebound in Nigeria’s capital importation in Q3 2025 was not translating into meaningful expansion of productive capacity and called for urgent structural reforms.

Agama also said the market’s contribution to the nation’s Gross Domestic Product (GDP) increased significantly from 13 per cent to 33 per cent within the same period, underscoring the sector’s expanding role in economic development.

He spoke in Lagos during his inaugural address to members of the Capital Market Working Group on Market Liquidity at the Commission’s office.

The SEC boss described the growth figures as evidence of strong investor confidence and the resilience of the Nigerian capital market under the present administration, but stressed that market size alone was not enough without corresponding depth and liquidity.

“Since this administration came into being in April 2024, we have seen market capitalisation grow from about N55 trillion to over N123.93 trillion. Our contribution to GDP has moved from 13 per cent to 33 per cent.

These are impressive figures, but they tell only part of the story,” he said.

According to him, liquidity remains critical to sustaining the growth momentum, noting that a market must be deep and efficient to effectively perform its primary function of capital formation.

“A capital market is often described as the barometer of an economy’s health. But for that barometer to be accurate, the market must be more than just large; it must be liquid,” he said.

Agama identified key structural challenges, including high transaction impact costs for institutional investors and the concentration of trading activities in a limited number of highly capitalised stocks, which he said leaves the broader market relatively shallow.

He warned that without sufficient liquidity, investors might be reluctant to enter the market if they are uncertain about their ability to exit positions without significant price distortions.

To address these concerns, the SEC inaugurated a multi-stakeholder Working Group comprising exchanges, custodians, fund managers, dealing members and other market operators.

The group is expected to develop practical recommendations to improve trading efficiency, deepen participation and enhance price discovery.

Among its mandates are a comprehensive review of trading and settlement infrastructure, identification of technical and structural bottlenecks affecting transaction speed, and proposals to make Nigeria’s settlement cycle more competitive with other emerging markets.

The group is also expected to recommend measures to broaden retail participation, with the SEC targeting the onboarding of up to 20 million new investors through digital platforms, dematerialisation of share certificates and fintech partnerships.

Recent data from the National Bureau of Statistics (NBS) showed that total capital inflows rose to $6.01 billion, representing a 380 per cent year-on-year increase and a 17 per cent quarter-on-quarter growth.

Yusuf noted that the bulk of inflows went into the banking and financial sectors, with only marginal allocation to manufacturing, infrastructure and other productive activities, pointing out that this simply means no meaningful expansion is happening in the productive sector.

Without stronger capital flows into industry, agro-processing, logistics, energy and export-oriented manufacturing, he said, the broader economy will see limited gains in employment, productivity and inclusive growth.

“Financial deepening without real-sector expansion risks creating a liquidity-driven recovery that does not fundamentally alter Nigeria’s productive base,” he said.

He, however, hailed the rising numbers, noting that they reflect a partial restoration of investor confidence following recent macroeconomic reforms, including FX liberalisation, tighter monetary policy and improved liquidity conditions in the domestic financial system.

However, he said, while the headline numbers look encouraging, a deeper examination of the structure and distribution of inflows reveals underlying vulnerabilities that must be addressed to ensure durability and long-term economic transformation.

Noting that the resurgence in capital importation is overwhelmingly portfolio-led, he said over 80 per cent of total inflows in the period under review were portfolio investments, while foreign direct investments (FDIs) accounted for less than five per cent.

“This composition raises important concerns. Portfolio flows, by nature, are highly sensitive to global interest-rate movements, risk sentiment, and policy credibility. They provide liquidity support and can help stabilise financial markets in the short term, but they are volatile and prone to sudden reversals.

Sustainable economic growth, job creation and export expansion depend not on short-term capital but on stable, long-horizon FDI tied to production, infrastructure, manufacturing and technology transfer. The present structure, therefore, reflects cyclical financial recovery rather than structural economic transformation,” he noted.

Expressing further concern that foreign inflows remain heavily concentrated among a small number of countries, the United Kingdom, United States (U.S.) and South Africa, he said such concentration exposes Nigeria to policy shifts, monetary tightening cycles and investor sentiment changes within a limited set of jurisdictions.