Rising insecurity across Nigeria, coupled with ongoing macroeconomic challenges, has continued to erode foreign investor confidence in the country’s capital market as domestic transactions made up approximately 85 per cent of the total market transactions, leaving foreign participation at just 15 per cent.
This negative sentiment has been evident in the Domestic and Foreign Portfolio Investment Report of the Nigerian Exchange Limited (NGX), which revealed that domestic investors now account for a dominant share of trading activity on the NGX in 2024.
This imbalance has persisted in 2025, with transaction data showing that total domestic transactions stood at about N2.419 trillion, while foreign transactions amounted to around N996.03 billion.
As of May 31, 2025, the total value of transactions at the nation’s bourse rose sharply by 45.3.per cent, increasing from N482 billion in April to N700.50 billion in May. When compared to the same period in 2024, which saw total transactions of N355.38 billion, the market recorded a substantial year-on-year increase of 97.1 per cent.
Also, within the same period in May 2025 alone, domestic investors were responsible for a significantly larger share of market activity, outpacing foreign investors by about 66 per cent.
A closer look at the data between April and May 2025 revealed a notable surge in domestic investor participation. Domestic transactions grew by 38.81 per cent, rising from N418.97 billion in April to N581.59 billion in May.
Foreign transactions, while still representing a smaller share, also increased significantly, rising by 88.54 per cent from N63.07 billion to N118.91 billion within the same period.
This uptick among foreign investors may signal a cautious return to the market, but overall levels remain well below domestic engagement. Within the domestic segment, retail investors have shown stronger momentum compared to their institutional counterparts. In May 2025, retail activity rose dramatically by 86.12 per cent, increasing from N181.31 billion in April to N337.46 billion. Institutional investment also grew, though at a slower pace, recording a 2.72 per cent increase from N237.66 billion to N244.13 billion.
When viewed through a longer-term lens, the structure of market participation in Nigeria has evolved. Between 2007 and 2024, domestic transactions rose by 33.15 per cent, growing from N3.556 trillion to N4.735 trillion.
During the same period, foreign transactions increased by 38.31 per cent, rising from N616 billion to N852 billion. However, the recent dominance of domestic investors, particularly amid a backdrop of security concerns, inflationary pressure, currency instability, and policy uncertainty, reflects growing caution among international players.
Despite some fluctuations, domestic investors remain the backbone of the Nigerian stock market. Analysts argued that the persistent dominance of domestic investors, while providing some resilience to the market, raises important questions about the future role of foreign capital in Nigeria’s economic development.
According to them, without consistent foreign portfolio flows, the market may face limitations in accessing deeper pools of liquidity and benefiting from global investor sentiment.
Moreover, the reduced foreign participation may also reflect broader concerns about the rule of law, policy consistency, and investor protections. To reverse this trend and encourage foreign re-engagement, Nigeria will need to make concerted efforts in addressing insecurity, stabilising its foreign exchange regime, and implementing structural reforms that improve the ease of doing business.
Until then, the local investor, particularly the agile retail segment, will likely continue to drive market momentum.
