Foreign investors welcomed Nigeria’s recent macroeconomic reforms but flagged persistent concerns about oil price volatility, capital repatriation risks, and high transaction costs during a private investor forum hosted by the Central Bank of Nigeria (CBN) at the Nasdaq MarketSite in New York on April 17, 2025.
The event, themed “The Nigeria Investment Agenda: Pathways for Growth & Global Partnerships,” was held in collaboration with NGX Group, J.P. Morgan and AVCA.
It attracted representatives from top global financial institutions, including Citi, JPMorgan Chase, Standard Chartered, and Jadara Capital Partners.
Although the CBN’s reform agenda was broadly acknowledged as a step in the right direction, foreign investors made it clear that sustained investor confidence will depend on Nigeria’s ability to manage key structural and external risks, especially oil market volatility.
Investors welcomed reforms but flagged oil risks
Joyce Chang, Chair of Global Research at JPMorgan Chase, commended Nigeria for making progress on long-standing structural issues, including the removal of fuel subsidies and FX liberalisation.
However, she noted that the global environment had changed significantly, citing U.S. tariff hikes and a higher risk of recession.
“We’re now dealing with a potential 3% of GDP tax effect from recent U.S. tariffs,” Chang said. “Nigeria has made strides, but oil price volatility remains a key risk.”
JPMorgan now places the probability of a U.S. recession at 60%, up from 40% before the new tariffs were announced.
Oil prices, a key source of Nigerian revenue, are expected to fall into the $50s range by 2026. This dynamic, Chang said, introduces macroeconomic fragility that investors must price in.
Investors call for Nigeria to move beyond oil
For some investors, however, the focus on oil price risks may be losing relevance. Razia Khan, Chief Economist for Africa and the Middle East at Standard Chartered, argued that Nigeria’s recent reforms—especially around FX—have created a platform for reduced dependence on oil.
“Nigeria is finally at a point where it might be able to break free from the oil cycle,” Khan said. “We now have a more competitive exchange rate and a structure that could support real wealth creation outside oil.”
She added that investor concerns about repatriation and macro stability are being addressed through FX reform and monetary tightening, but urged policymakers to stay the course.
“Structural reforms take time. Nigeria is only just at the beginning of a credible path toward diversification,” she said.
FX reforms improve sentiment, but doubts remain
Jason Rekate, Global Co-Head of Corporate Banking at Citi, said investor interest in Nigeria is rising sharply compared to recent years, driven primarily by FX reforms that now allow capital inflows and outflows with greater transparency.
“It’s a different conversation now. Nigeria is no longer on the ‘penalty box’ list,” Rekate said. “Clients are asking how soon they can enter, not if.”
Despite this shift, Rekate noted that global sentiment is still fragile and that oil remains a “transmission channel” for external shocks into the Nigerian economy.
A global recession, he warned, would renew pressure on the naira and test the durability of Nigeria’s new FX regime.
Calls for stronger market structure and regulatory clarity
Ahmad Zuaiter, Co-Founder and CIO of Jadara Capital Partners, also welcomed Nigeria’s reform momentum but stressed that significant frictions remain in its capital markets.
“Two years ago, virtually no portfolio investors were active in Nigeria due to capital controls,” he said. “Today, that has changed, but costs remain prohibitive.”
Zuaiter cited average transaction costs of 2–3% for listed equities in Nigeria, compared to 10–15 basis points in Saudi Arabia or Egypt. He attributed much of this to regulatory inefficiencies and levies such as stamp duties.
He also urged Nigerian regulators to provide firmer assurances on market stability. “Capital controls, FX restrictions, and circuit breakers on stocks have been used too often in the past. Investors need credible signals that those days are over,” he said.
Nigeria’s long-term outlook still draws optimism
Despite short-term concerns, panellists agreed that Nigeria’s demographics, resource base, and reform momentum make it one of the more attractive frontier markets for long-term investors.
Standard Chartered’s Khan referenced the country’s growing population and recent census exercise as indicators of future consumer market scale.
“Nigeria could become the third most populous nation by 2050,” she said. “Foreign investors haven’t fully positioned for that growth.”
Joyce Chang reinforced the view that Nigeria is becoming more mainstream in emerging market investment discussions.
“We had Nigeria as a top recommendation for 18 months,” she said. “While near-term caution persists due to oil, Nigeria’s structural shift is being noticed.”
Key investor asks the CBN
Throughout the forum, foreign investors were clear about what they needed from Nigeria to unlock further inflows:
- Sustained FX policy consistency without arbitrary restrictions or market shutdowns.
- Reduction in transaction costs and regulatory friction in capital markets.
- Clearer policy direction on non-oil revenue reforms, including VAT and taxation.
- Improved ease of doing business, particularly for physical access, infrastructure, and travel.
- Commitment to transparency in monetary and fiscal policy communication.
What you should know
Nigeria’s foreign exchange reform efforts began in June 2023 following the inauguration of President Bola Tinubu.
The Central Bank of Nigeria (CBN) moved to unify the multiple exchange rate windows, transitioning toward a more market-reflective system. This included the removal of restrictions on FX transactions, allowing demand and supply dynamics to play a greater role in rate determination.
Since the reforms, the naira has experienced significant volatility but began to stabilize in early 2025 following a series of monetary tightening measures and improved FX market transparency. For most of Q1 2025, the exchange rate held steady, with improved investor sentiment and higher FX inflows through formal channels.
However, in April 2025, the naira came under renewed pressure, largely driven by global uncertainty tied to former U.S. President Donald Trump’s tariff announcements. The tariffs led to a broader risk-off sentiment in emerging markets and a decline in oil prices, Nigeria’s primary export revenue source.
In response, the CBN intervened in the FX market, injecting liquidity to support the naira. It also provided updated guidance on Nigeria’s external reserves, stating that net reserves currently stand at $23 billion.
These developments formed the backdrop of the CBN’s investment roadshow in New York, where global investors sought clarity on the sustainability of Nigeria’s FX framework and its broader macroeconomic direction.
