Foreign Portfolio Investment (FPI) net capital outflow from the Nigerian equities market has surged by more than 1,073 per cent in three years, reaching N266.07 billion by July 2026, amid growing concerns over foreign investors’ willingness to retain their positions in Nigerian stocks.
Data released by the Nigerian Exchange Limited (NGX) showed that foreign investors remained net sellers throughout the first seven months of the year, with the gap between capital entering and leaving the equities market widening sharply in 2026.
The latest figures indicate that while foreign investors are still bringing substantial funds into the Nigerian market, they are withdrawing considerably more than they invest.
In the first seven months of 2023, foreign investors brought N81.47 billion into the NGX but withdrew N104.15 billion, resulting in a net outflow of N22.68 billion.
By the corresponding period in 2024, the net outflow had nearly tripled to N64.72 billion. Foreign inflows increased significantly to N266.64 billion, but outflows climbed even faster to N331.36 billion.
The trend continued in 2025, when foreign inflows rose to N609.73 billion, while outflows reached N671.56 billion, leaving the market with a net foreign outflow of N61.83 billion.
However, the situation deteriorated considerably in 2026.
Between January and July, foreign investors recorded N513.36 billion in inflows against N779.43 billion in outflows, producing a net outflow of N266.07 billion.
The latest figure represents more than four times the N61.83 billion net outflow recorded during the corresponding period of 2025 and about 11.7 times the N22.68 billion recorded in 2023.
Interestingly, foreign investment inflows have not collapsed. Compared with the first seven months of 2023, inflows in 2026 increased by more than 530 per cent, while outflows rose by approximately 648 per cent.
Analysts therefore believe the central challenge facing the Nigerian equities market may no longer be attracting foreign capital, but retaining it after it enters the country.
Factors identified as contributing to the widening outflow include profit-taking, portfolio rebalancing and continued caution among international investors over Nigeria’s macroeconomic and investment environment.
2026 Records Sharp Deterioration
The deterioration became evident across the monthly figures for 2026, with foreign outflows exceeding inflows in every month from January through July.
In January, foreign investors brought in N47.86 billion but withdrew N66.28 billion, resulting in an N18.42 billion deficit.
February provided some relief as inflows rose by 39.4 per cent month-on-month to N66.71 billion, while outflows increased by 9.1 per cent to N72.32 billion. The resulting deficit narrowed to N5.61 billion.
March recorded the largest movement during the period. Foreign inflows jumped 60.5 per cent to N107.05 billion, but outflows surged by 151.3 per cent to N181.77 billion. This produced the year’s highest monthly deficit of N74.72 billion.
In April, inflows fell 15.1 per cent to N90.84 billion, while outflows declined 13.7 per cent to N156.94 billion, leaving a deficit of N61.10 billion.
May saw temporary improvement, with inflows declining marginally to N87.60 billion and outflows plunging 38.8 per cent to N96.01 billion. The deficit consequently narrowed to N8.41 billion.
The improvement was short-lived. In June, outflows rose 19.9 per cent to N115.08 billion, while inflows dropped 18.1 per cent to N71.71 billion, widening the deficit to N43.37 billion.
July recorded the weakest foreign inflow of the year at N41.59 billion, representing a 42 per cent decline from June. Outflows also fell by 20.9 per cent to N91.03 billion, but remained substantially higher than inflows, leaving a monthly deficit of N49.44 billion.
Domestic Investors Cushion Impact
The surge in foreign outflows has occurred despite a significant expansion in overall trading activity on the NGX.
Total transactions reached approximately N11.98 trillion in the first seven months of 2026, nearly double the N6.01 trillion recorded during the corresponding period of 2025.
The increase, however, was driven largely by domestic investors, who have increasingly filled the gap created by reduced foreign participation.
David Adonri, Managing Director of Highcap Securities Limited, said Nigeria still needed greater participation by foreign investors because of the multiplier effect their investments have on the wider economy.
According to Adonri, the increased participation of Nigerian institutional investors, particularly pension fund administrators, means local investors now have greater capacity to provide liquidity to the domestic market.
He, however, cautioned that the increased domestic participation should not necessarily be interpreted as evidence that foreign investors have abandoned Nigeria.
Adonri said the surge in local investment could have reduced foreign investors’ share of overall market participation in percentage terms.
He also attributed part of the large foreign outflows to profit-taking and the repatriation of dividends and returns following the strong rally in Nigerian equities.
He noted that the Central Bank of Nigeria had also released funds previously trapped in the country and owed to some foreign investors.
Adonri described FPI as highly mobile capital, unlike Foreign Direct Investment, noting that portfolio investors move their funds between markets in search of attractive returns.
He said foreign investors would be less likely to exit suddenly if Nigeria could maintain a capital market that is profitable, liquid and safe, with sovereign risk kept under control.
CIS President Raises Liquidity Concern
Fiona Ahimie, President of the Chartered Institute of Stockbrokers, said the widening foreign outflow was a concern because international investors had yet to demonstrate sufficient confidence in holding Nigerian equities over the long term.
She said the development meant Nigeria was losing an important source of foreign currency and market liquidity.
However, Ahimie stressed that the figures did not represent a collapse of the Nigerian equities market, pointing to the strong participation of domestic investors.
She said the bigger concern was market depth, noting that foreign investors typically bring large pools of capital and provide liquidity to major stocks.
Ahimie said policymakers needed to focus on making Nigeria attractive enough for foreign investors to remain in the country rather than simply creating conditions that encourage them to enter.
She noted that foreign exchange conditions had improved, with the naira relatively stable, improved FX liquidity and external reserves crossing $54 billion.
However, she identified lingering concerns over capital gains tax, inflation, policy consistency, market liquidity, corporate governance, regulatory predictability and market infrastructure as issues that needed to be addressed.
She also linked the low level of foreign participation in July to profit-taking following the strong performance of Nigerian equities, as well as the appreciation of the naira, which provided some foreign investors with an opportunity to lock in returns.
Uncertainty surrounding Nigeria’s move to T+1 settlement and FTSE Russell’s decision to place the country’s frontier-market reclassification under further review may also have encouraged some investors to remain on the sidelines.
Foreign participation fell to just 5.60 per cent in July, the lowest level recorded during the year.
Foreign Investors Shift Towards Fixed Income
Tajudeen Olayinka offered another explanation for the trend, arguing that foreign investors had not completely abandoned Nigeria’s capital market.
Instead, he said, many foreign investors had shifted a greater proportion of their holdings towards fixed-income securities because of the attractive yields available in that segment.
According to Olayinka, Federal Government bonds and Treasury bills have become particularly attractive to international investors seeking higher returns.
He explained that foreign portfolio investors typically move capital across global markets based on the relationship between risk and returns, with short-term benefits often playing an important role in their decisions.
Olayinka said investors tend to remain in a market when they consider the environment safe and believe that market forces can efficiently allocate capital.
He stressed that Nigeria still needed foreign investors because of the liquidity they bring to the domestic capital market and the wider foreign exchange market.
He also argued that foreign portfolio investors had contributed partly to the recent stability of the naira exchange rate.
The key, he said, was to achieve a healthy balance between domestic and foreign portfolio investors to reduce the volatility that can occur when a market becomes excessively dependent on foreign capital.
The Bottom Line
The latest NGX figures present a mixed picture of Nigeria’s equities market.
On one hand, foreign investors continue to commit hundreds of billions of naira to Nigerian assets, while domestic investors have helped drive record levels of trading activity.
On the other hand, the fact that foreign outflows have consistently exceeded inflows—and that the net outflow widened to N266.07 billion by July 2026—highlights a persistent challenge for policymakers and market operators.
For Nigeria, the immediate task may therefore be shifting from simply attracting foreign portfolio capital to creating the stability, transparency, liquidity and predictable returns required to keep that capital in the country for longer.
