Foreign portfolio investors recorded a net capital outflow of N266.07 billion from the Nigerian equities market in the first seven months of 2026, marking a sharp increase from N22.68 billion recorded during the corresponding period in 2023.
Data from the Nigerian Exchange Limited showed that foreign investors withdrew more funds from the market than they injected throughout the three-year period, with the gap between inflows and outflows widening significantly in 2026.
Between January and July 2023, foreign investors injected N81.47 billion into the market but withdrew N104.15 billion, resulting in a net outflow of N22.68 billion.
The net outflow almost tripled to N64.72 billion in the corresponding period of 2024, despite foreign inflows rising to N266.64 billion. Outflows, however, climbed to N331.36 billion.
In the first seven months of 2025, inflows rose to N609.73 billion, while outflows stood at N671.56 billion, leaving a net outflow of N61.83 billion.
The situation worsened considerably in 2026, with foreign investors bringing N513.36 billion into the equities market between January and July but taking out N779.43 billion, resulting in a net outflow of N266.07 billion.
The 2026 figure represented more than a fourfold increase from the N61.83 billion net outflow recorded in the corresponding period of 2025 and about 11.7 times the N22.68 billion recorded in 2023.
Analysts said the development indicates that while Nigeria may still be attracting foreign capital, retaining international investors has become a more significant challenge.
They attributed the widening gap to profit-taking, portfolio rebalancing and continued concerns about Nigeria’s macroeconomic and investment environment.
Despite the foreign capital outflows, overall trading activity on the NGX expanded significantly. Total transactions reached about N11.98 trillion in the first seven months of 2026, nearly double the N6.01 trillion recorded in the corresponding period of 2025, with domestic investors accounting for much of the growth.
Monthly figures showed that foreign outflows exceeded inflows in every month from January to July.
March recorded the largest monthly deficit of N74.72 billion after inflows rose to N107.05 billion while outflows surged to N181.77 billion. April followed with a deficit of N61.10 billion, while July recorded a N49.44 billion shortfall.
Reacting to the trend, the Managing Director of Highcap Securities Limited, David Adonri, said Nigeria still required stronger foreign investor participation because of its wider economic benefits.
He said, “In the world of investment, the more the merrier. Notwithstanding the dominance of local investors in a domestic capital market, the economy still needs increasing participation of foreign investors (Foreign Direct Investment, FDI and Foreign Portfolio Investment, FPI) because of the multiplier effects.
“Following several past reforms, Nigerian institutional investors, especially PFAs, now have the capacity to satisfy the liquidity needs of the market. This, they achieve easily because of the shallow depth of the capital market.
“It may also not mean that the participation of foreign investors in the Nigerian capital market has diminished in aggregate terms, but comparatively in percentage. The surge in local investment may have watered down foreign participation.”
Adonri said some of the large outflows could be linked to foreign investors taking profits and repatriating dividends following the prolonged rally in Nigerian equities.
He also noted that the release of previously trapped funds by the Central Bank of Nigeria may have contributed to the movement of capital.
“FPI, unlike Foreign Direct Investment, FDI, is not a static capital. It is the working capital that foreign investors employ to trade, which they move from market to market. They are usually hot monies that are always on the move.
“If a capital market is profitable, liquid and safe, and sovereign risk is controllable, their propensity to sudden flight will be curtailed,” he said.
The President of the Chartered Institute of Stockbrokers, Fiona Ahimie, described the widening outflow as a concern, saying it reflected lingering hesitation among foreign investors about holding Nigerian equities over the long term.
She said, “The widening outflow is a concern because it shows that foreign investors are still not fully comfortable holding Nigerian equities for the long term. It also means Nigeria is losing an important source of foreign currency and market liquidity.
“That said, I would not interpret it as a collapse of the Nigerian market. Domestic investors have stepped in strongly, and this has helped keep market activity robust. The bigger issue is market depth.”
Ahimie said Nigeria needed to focus on making the investment environment attractive enough for foreign investors to remain in the market rather than merely attracting them initially.
“The message for policymakers is clear: we need to make Nigeria attractive enough for foreign investors to stay, not just attractive enough for them to enter,” she said.
She identified policy consistency, deeper market liquidity, stronger corporate governance, predictable regulation and efficient market infrastructure as key factors that could improve investor confidence.
On the low foreign participation recorded in July, Ahimie attributed the development partly to profit-taking following the strong performance of Nigerian equities, as well as uncertainty surrounding market reforms.
Meanwhile, capital market analyst Tajudeen Olayinka said foreign investors had not completely abandoned Nigeria but were increasingly concentrating their funds in fixed-income securities due to attractive yields.
He said, “What we must understand is that foreign investors haven’t totally left the Nigerian capital market. They have only concentrated their holdings in fixed-income securities because of the juicy state of the high-yield environment in that space, especially with respect to sovereign securities-Federal Government bonds and Treasury bills.
“Foreign portfolio investors move around the globe to seek greater returns on a risk/return basis, usually considering short-term benefits. Once the environment is safe, they stay.”
Olayinka stressed the importance of maintaining a healthy balance between domestic and foreign investors, noting that foreign participation remains important for market liquidity and broader capital market stability.