Whether you like it or not, every move by Abuja such as tax tweaks, CBN guidance, PENCOM circulars, NAICOM rules, import policies shows up in your portfolio.
After the turbulence of 2023–2024, the macro backdrop is finally less hostile with headline inflation having eased to 18.02% (Oct 2025), the MPR is 27%, and the naira has strengthened to N1,464/$.
That shift doesn’t just change the market mood; it changes where and how you make money.
Below, we translate some key policy levers into practical plays for retail investors.
Capital Gains Tax (CGT) on large share sales and tax on FGN bonds
Recent tax changes target bigger-ticket capital gains (e.g., aggregate share disposals above N150 million within 12 months) and mean interest on FGN bonds is now taxed.
Two consequences follow:
- If you’re regularly crystallizing large gains, your after-tax equity returns shrink unless you plan disposals smartly.
- When you invest in fixed income products like bonds, the interest rate you see isn’t what you actually get to keep.
What matters is how much you take home after paying taxes, so always compare the money you’ll really receive (not just the advertised rate) with what you’d get from things like T-Bills, commercial papers, or stocks that pay dividends.
What to do:
- Instead of one big sale, stagger exits across tax periods to keep realized gains below key thresholds where possible.
- If you hold laggards, you no longer believe in, realize losses strategically to net down gains. That is, sell losing investments to reduce your taxable profits from winners.
- For example, a bond with a 15% interest rate might give you only about 12–13% after tax, depending on your situation. So, a CP that pays 20% from a trusted company could give you more money, as long as you are comfortable with the risk.
- Choose mutual funds that help you pay less tax and give you more steady cash payouts.
Fiscal deficit = more FGN bond issuance
Because the government is spending more than it earns, it has to borrow more money by issuing bonds.
When there are more bonds available, interest rates usually go up for a while.
Combine that with moderating inflation, and you get a sweet spot: attractive nominal yields now, with scope for capital gains later if yields compress as inflation trends lower.
What to do:
- You can often get a better deal on bonds and T-Bills during government auctions, especially when lots are available. But you need to have like N50 million and above.
- Mix short and long by picking some 1-year T-Bills and some 3–7 year government bonds to lock in today’s higher rates and possibly earn more if inflation drops.
- Include some top-rated commercial papers (about 20% yield) but make sure to choose safe companies and spread out your risk.
Insurance Act recapitalization
NAICOM’s recap push forces insurers to raise equity, merge, or exit. In the short run, capital raises can dilute EPS and pressure prices.
In the medium term, stronger balance sheets enable bigger policy limits, better reinsurance terms, and tech investments—ingredients for ROE rebuild.
What to do:
- Favor insurers that already exceed new thresholds or have credible, minimally dilutive recap plans.
- Trade the consolidation wave as potential M&A can unlock value (cost synergies, pricing power). Accumulate into weakness for names likely to be buyers, not targets.
- Expect a near-term pause in payouts; the prize is a healthier sector with improved underwriting margins and scale economics.
CBN’s FX stance + high policy rates = naira assets back in favour
Keeping rates elevated to stabilise FX has made naira fixed income compelling versus hoarding dollars. A simple comparison:
- N5m in a 14% FGN bond grows to ~N5.7m (N700k gain).
- Converting N5m to $ at N1,464/$ = $3,415; at 7% in a Eurobond you end up near $3,655. If the naira strengthens further, your naira conversion value shrinks.
What to do:
- Increase allocation to T-Bills/FGN/corporates while the naira remains well-supported.
- Maintain some dollar assets for diversification and tail-risk hedging but let naira carry do the heavy lifting today.
- If you believe inflation keeps falling, longer bonds add price-upside optionality.
PENCOM asset-allocation guidance
When PENCOM nudges or permits higher equity allocations for pension funds, it creates a structural bid for quality shares.
That supports valuations of profitable large caps and improves liquidity across the board. Even whispers of allocation flexibility can move flows.
What to do:
- Own what pensions want which are large, liquid names with improving earnings visibility, disciplined capital allocation, and clear governance.
- Think of banks with capital buffers, telcos with data-led growth, consumer names with pricing and local sourcing.
- Lean into factor quality like high ROIC, low net leverage, and resilient free cash flow. These screens attract institutional flows first.
- If stock picking isn’t your thing, balanced or equity funds already position ahead of allocation cycles. You can also subscribe to Nairametrics premium website FTM.NG where we exclusively share our stock picks.
Import policies & FX access
Tighter import regimes and FX access constraints have forced FMCGs and processors to localise inputs.
Meanwhile, agro-linked businesses with domestic raw materials or backward integration are better insulated from currency swings and port bottlenecks.
What to do:
- Consumer goods and agro-processors with proven local supply chains can protect margins as the naira stabilises. Think Okomu Oil, Presco, Nestle etc.
- Track who’s investing in storage, logistics, silos, and farms; those spend cycles show up in lower unit costs and share gains later.
- When farm-gate prices diverge less from retail, localised producers tend to expand margins.
We drop these nuggets every Wednesday on Nairametrics, helping you stay ahead of market trends and policy shifts.
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