Why NGX foreign portfolio investment booms

Central Bank of Nigeria (CBN) headquarters in Abuja Spread the word The Central Bank of Nigeria (CBN) has announced significant improvements in net foreign portfolio investment into Nigeria between January and August 2026. CBN Deputy Governor, Muhamad Sani Abdullahi, made the announcement in Abuja last week during the 38th seminar for Finance Correspondents and Business Editors.

Abdullahi said that Nigeria’s foreign exchange reserves have been strengthened as increased private sector dollars inflow, foreign portfolio investments, and diaspora remittances boost liquidity.

Net foreign portfolio inflows between January and August 2026 rose to $6.3 billion. 

Britain made the highest foreign portfolio investment. It was followed by the United States of America (USA), Mauritius, The Netherlands and South Africa, among others. 

Banking and financial services attracted more capital importation through foreign portfolio investments into the Nigerian Exchange Group (NGX).

The CBN said the increase in foreign portfolio investments provided a significant source of foreign exchange for the economy.

Consequently, the forex in Nigeria’s foreign exchange reserves has risen to $55.5 billion. The development has also stabilised the exchange rate of the naira.

The naira traded last week at N1,330 to the dollar as a result of the increase in foreign exchange inflows.

Net foreign exchange inflow is the total value of all the money that foreign investors put into a host country’s local business over a given period of time.

The World Bank contends that net foreign exchange inflow show the true health and balance of cross border corporate investments. It signals a rise in investor confidence in the host country’s economy.

Abdullahi said that autonomous sources accounted for the bulk of the foreign exchange inflows recorded between January and August 2026.

The development has consequently reduced CBN’s direct interventions in the foreign exchange market. 

The NGX is the center of attraction for foreign portfolio investors as a result of the high double digits return on investments it is known for.

At the moment, even with last week’s massive taking of profit, which resulted in days of bearish runs in the NGX, the return on investment still stands menacingly above 59 per cent.

Foreign portfolio investors cannot ignore such return on investments because it stands out in the global capital markets.

Another factor that is drawing foreign portfolio investors into the NGX is the attractive dividends paid by some of the companies listed in the Nigerian capital market.

In 2025, Dangote Cement paid a dividend of N45 per share from a profit after tax (PAT) of $730 million. Bua Foods also paid an impressive dividend during the period.

Guaranty Trust Bank (GTB), one of the leaders in the banking and financial sectors of the NGX, broke the record as it paid a dividend of N12.04 per share in 2025. No bank has paid that level of dividend in the NGX before.

Besides the attractive return on investments and irresistible dividend pay outs, another factor that makes the NGX the lure of foreign portfolio investors is the high double digit yields in fixed income securities.

Ultimately, the NGX is the center of attraction to foreign portfolio investors largely because of the daring economic reforms embarked upon by the administration of President Bola Ahmed Tinubu.

The president removed petrol subsidy in 2023 and channeled hitherto wasted revenue into government coffers. He ordered the CBN to unify the exchange rate of the naira and execute unthinkable reforms in the foreign exchange market.

Petrol subsidy was earlier considered as untouchable, but Tinubu touched it and recouped funds into government coffers.

Now, the Federal Government is embarking on massive road construction and other infrastructure rehabilitation due the increase in revenue from petrol subsidy withdrawal.

The road construction and other infrastructure rehabilitation like rail extensions are creating thousands of jobs and growing the economy at very attractive rate.

The unification of the exchange rate of the naira and significant reforms in the foreign exchange market has resulted in increase in the inflow of foreign portfolio and direct investments.

The truth is that the increase in Nigeria’s foreign reserves is noticed by foreign investors who are consequently rewarding the country for the improvement.

Some years ago, it was difficult for foreign investors to repatriate the proceeds of their investment in Nigeria because with a paltry $33 billion in the foreign exchange reserves, the CBN could not easily dole out foreign exchange to foreign investors for the export of the proceeds of their investments. 

Billions of dollars in foreign investors’ proceeds were trapped in Nigeria because of dearth of foreign exchange.

Today, with $55.5 billion in the reserves, the CBN is willing to allocate foreign exchange to foreign investors for the repatriation of their investment proceeds. That is partially responsible for the surge in foreign portfolio investment into the NGX.

Blueprint.ng commends the Federal Government for the reforms that now make the NGX the cynosure of foreign portfolio investors.