The Nigerian equity market experienced a significant surge in activity between January 2024 and May 2025, recording a total transaction value of N9 trillion. A striking feature of this growth was the dominance of domestic investors, primarily institutional players, who accounted for N7.15 trillion or approximately 80% of the total transactions. This robust domestic participation underscores the growing confidence in the Nigerian market, fueled by consistent pension fund investments and supportive policy reforms. Foreign investors also contributed to the market’s vibrancy, accounting for the remaining N1.85 trillion, reflecting a renewed interest in Nigerian equities.
A closer examination of the data reveals a consistent upward trend in market activity. In 2024, total transactions reached N5.59 trillion, a substantial 32% increase compared to N3.58 trillion in 2023. This growth was propelled by both domestic and foreign investment, but the surge in domestic institutional activity was particularly noteworthy. December 2024 saw a remarkable peak in trading, with total transactions reaching N673.66 billion, a significant increase from the previous month. Again, domestic investors dominated, accounting for 90.09% of these transactions, with institutional investors playing a pivotal role.
This momentum continued into 2025, with May recording N700.50 billion in total transactions, a remarkable year-on-year increase of 97.11%. While domestic investors maintained their leading position with 83.02% of the total activity, foreign transactions also showed substantial growth, reaching N118.91 billion, an 88.54% increase from the previous month. Interestingly, within the domestic segment, retail investors outperformed institutional investors in May 2025, indicating broadening participation in the equity market.
The increased foreign investor participation is particularly significant. While historically fluctuating, foreign investment saw a substantial increase in March 2025, reaching a peak of 62.74% of total transactions. This surge can be attributed to improved investor confidence due to reforms in the foreign exchange market and macroeconomic policies aimed at creating a more stable and attractive investment climate. The year-to-date figures for May 2025 further highlight this trend, with foreign investors contributing N996.03 billion, significantly higher than the same period in 2024.
Analyzing the long-term trend, data spanning 18 years (2007-2024) reveals a consistent increase in both domestic and foreign transactions, although domestic participation has always remained dominant. Experts attribute this resilience and sustained growth to the structural reforms implemented after the 2007 global financial crisis, which shifted the market’s focus from retail to institutional investors, particularly pension funds. This structural shift has created a more stable and resilient market, less susceptible to the volatility often associated with retail-driven trading.
The resurgence of the Nigerian equity market is a testament to the combined influence of factors like increased domestic institutional investment, driven largely by pension funds, and the returning confidence of foreign investors. The reforms implemented following the 2007 financial crisis, along with the current administration’s focus on exchange rate stability, unrestricted capital flows, and profitability, have created a conducive environment for sustained growth. The increased participation of both domestic and foreign investors signals a positive outlook for the Nigerian capital market, positioning it for continued expansion and resilience amid global economic uncertainties. Furthermore, the shift towards institutional dominance has instilled a greater degree of rationality and stability in the market, reducing its vulnerability to speculative bubbles and external shocks. The continued growth of pension funds and their consistent investment in the capital markets also plays a crucial role in maintaining market liquidity and bolstering investor confidence.
