Juliet Ezeh
Foreign investors are increasingly abandoning Nigeria’s equities market in favour of the banking sector, as new data reveal a sharp contrast in capital allocation trends across the country’s financial landscape.
Figures released by the National Bureau of Statistics show that while overall capital importation surged in 2025, inflows into shares declined by 16.8 per cent year-on-year to $271.42m, highlighting weakening appetite for equity investments.
The drop comes despite a broader rise in foreign capital entering the economy, suggesting that investors are becoming more selective, favouring sectors perceived as more stable and policy-backed.
In contrast, Nigeria’s banking industry has emerged as the primary beneficiary of this shift, attracting $13.53bn in inflows—more than half of total capital imported during the year.
Market analysts link this trend to the ongoing recapitalisation programme spearheaded by the Central Bank of Nigeria, which has strengthened confidence in the financial system and positioned banks as safer investment channels.
Quarterly data reinforce this divergence. While equity inflows showed volatility—rising in some quarters and plunging in others—banking inflows remained consistently strong throughout the year, reflecting sustained investor confidence.
The growing preference for banking assets is also evident in the surge of financing-related inflows, which jumped significantly, indicating that investors are opting for structured financial instruments over riskier equity positions.
Governor Olayemi Cardoso noted that the recapitalisation exercise has already seen dozens of banks meet new capital thresholds ahead of the 2026 deadline, strengthening the sector’s resilience.
Experts say this trend signals a broader repositioning of Nigeria’s financial markets, where foreign investors are prioritising security, regulatory clarity, and long-term returns over speculative opportunities.
However, the decline in equity inflows raises concerns about the depth and attractiveness of Nigeria’s stock market, which may require renewed reforms to regain investor confidence.
Overall, while Nigeria recorded a strong increase in total capital importation in 2025, the underlying data reveal a more nuanced story—one of shifting investor priorities, where stability and regulatory-driven sectors are gaining ground at the expense of traditional equity investments.
Juliet Ezeh is the founder and chief reporter at Westbridge Reporters with over 7 years of experience in journalism. She covers crime, industry, policy, and social developments, delivering timely and accurate reporting.