Nigeria slipped one place in the latest Absa-OMFIF African Financial Markets Index as subdued trading activity and cautious investor sentiment offset the impact of sweeping foreign-exchange reforms implemented during the review year.
The development underscores the continued fragility of Africa’s largest economy as it seeks to stabilise liquidity, rebuild confidence, and attract sustainable capital inflows.
The Central Bank of Nigeria’s overhaul of the foreign-exchange framework, designed to unify multiple exchange windows and improve transparency, was widely viewed as a major structural reform.
However, the transition period that followed created volatility in the secondary market, reduced turnover, and prompted cautious investor positioning. While the reform was intended to promote flexibility and efficiency, the market’s initial adjustment phase limited liquidity and slowed participation by both domestic and offshore investors.
In the fixed-income market, liquidity remained tight as the government’s borrowing needs expanded and debt-servicing costs rose.
The resulting imbalance dampened secondary-market trading and weakened overall performance.
Foreign participation also stayed below historical averages as international funds sought clearer currency stability before re-entering local-currency instruments. Analysts believe these conditions were pivotal in Nigeria’s lower composite ranking in the index.
The equities segment recorded subdued activity over the same period. High inflation, foreign-exchange uncertainty, and limited access to funding discouraged portfolio rotation and constrained retail participation. Although several listed firms reported strong earnings, the overall turnover ratio declined from the previous year, reflecting the cautious tone that has defined investor sentiment since mid-2024.
Despite the decline, Nigeria remains one of the continent’s five most developed financial markets, behind South Africa, Mauritius, and Uganda, while staying ahead of Namibia.
The index evaluates 29 African markets based on transparency, accessibility, market depth, and regulatory environment. South Africa retained the top position, supported by deep liquidity and strong institutional frameworks, while Uganda advanced due to sustained policy consistency and regulatory improvements.
Analysts suggest that Nigeria’s immediate priority should be to consolidate policy stability, strengthen foreign-exchange liquidity, and expand domestic participation through pension and insurance funds.
Improving market transparency, deepening product diversity, and maintaining clear communication between fiscal and monetary authorities are seen as vital steps toward restoring confidence.
