Nigeria is in advanced discussions with JP Morgan to re-enter its Government Bond Index, a move that could signal renewed investor confidence in the country’s foreign exchange (FX) regime following a series of sweeping reforms by the Central Bank of Nigeria (CBN).
This development was disclosed by Patience Oniha, Director-General of the Debt Management Office (DMO), during an investor engagement session jointly hosted by Nigeria’s Ministry of Finance and the Central Bank on the sidelines of the IMF/World Bank Spring Meetings in Washington, D.C.
Nigeria was yanked off the JP Morgan index in 2015 following changes to Nigeria’s forex policies which was interpreted as a return to capital control by foreign investors.
Why it matters
Being part of JP Morgan’s Government Bond Index is a key marker of investor confidence and provides access to billions of dollars in passive investment flows.
Nigeria’s inclusion would be seen as a global endorsement of recent efforts to liberalize and stabilize the FX market—an area that had previously cost the country its place on the index.
What the DMO DG is saying
Responding to a question on when Nigeria might be readmitted into the index, Oniha confirmed that talks with JP Morgan were ongoing and had gained traction on the back of Nigeria’s FX market reforms.
- “With all the reforms that have taken place, particularly around FX, we have started engaging JP Morgan again to get back into the index. We think we are eligible now,” she said.
Oniha acknowledged that Nigeria’s previous exclusion stemmed from challenges such as illiquidity and exit restrictions for investors, but noted that the new FX policies have improved transparency and functionality in the market.
- Sources familiar with Nigeria’s efforts to rejoin the JP Morgan index told Nairametrics that while discussions are indeed progressing, several key milestones still need to be achieved before re-entry is finalized.
- One of the main concerns, they noted, is the depth and liquidity of Nigeria’s local bond market, which must be sufficiently robust and attractive to global investors.
- However, the source expressed cautious optimism, suggesting that if current momentum is sustained, Nigeria could secure re-inclusion before the end of the year.
They also suggested that once the announcement is made, Nigeria could attract as much as $2 billion in immediate portfolio inflows, as passive funds tracking the index reposition.
Why Nigeria was removed from the index
Nigeria was first included in the JP Morgan Government Bond Index in October 2012, following the establishment of an active domestic bond market characterized by a two-way quote system, committed market makers, and a broad investor base.
However, in January 2015, JP Morgan placed Nigeria on its Index Watch list. The decision was driven by three core concerns:
1. Illiquidity in the FX market – Investors faced challenges in repatriating capital.
2. Lack of transparency – The mechanism for determining exchange rates was opaque.
3. Absence of a functional two-way FX market – This undermined investor confidence and pricing efficiency.
Nigeria was eventually removed from the index in September 2015 after it failed to address these issues.
In 2022, JP Morgan downgraded Nigeria from its “overweight” recommendation for emerging market sovereign debt. The downgrade was based on Nigeria’s inability to leverage high oil prices to strengthen its macroeconomic position.
The bank also cited growing macroeconomic risks, including deteriorating FX reserves, persistent subsidy payments, and low fiscal buffers.
Earlier in April 2025, JP Morgan advised investors to unwind their long positions in Nigerian Open Market Operation (OMO) bills. The advisory reflected growing concern over falling oil prices and renewed global trade tensions, which could further expose Nigeria’s fiscal vulnerabilities.
What re-entry could mean for Nigeria
A return to the index could boost Nigeria’s credibility in global capital markets and potentially unlock billions in passive investment inflows from asset managers who track such indices.
It would also reflect positively on the Central Bank’s ongoing efforts to restore order in the FX market through unified rates, improved liquidity, and more transparent pricing mechanisms.
Moreover, re-entry could lower Nigeria’s cost of borrowing and ease pressure on the naira by attracting dollar inflows from foreign investors.
