Investor confidence in Nigeria’s equities market remains low, despite stronger regulations. Local and foreign investors are prioritizing safety over opportunity. Regulatory bodies like the Securities and Exchange Commission (SEC), Nigerian Exchange Group (NGX), and Central Bank of Nigeria (CBN) are working to stabilize the market.
The Investment and Securities Bill (ISB) 2024 aims to address gaps, improve protections, and modernize the market. It includes sectors like digital assets and commodities. It also introduces tougher penalties. But according to David Adonri, Vice Chairman of Highcap Securities, these reforms won’t work unless they tackle broader economic and political issues.
Adonri says that regulations alone can’t restore investor confidence. “Rules are the foundation for trust, but macroeconomic conditions matter more,” he said.
In the past, Nigeria’s market attracted foreign investors with favorable economic conditions. Today, high inflation, volatile exchange rates, and political risks overshadow these factors. Foreign participation has dropped from 58% in 2014 to 16% in 2022. Despite some improvements since President Bola Tinubu took office in 2023, foreign investors remain cautious.
Inflation continues to erode purchasing power. The Central Bank’s policies haven’t done enough to control it. This makes long-term investment less appealing.
Currency volatility is another issue. Investors face major losses if the naira weakens against the dollar. For example, if the naira goes from N450 to N800 per dollar, an investor’s return will shrink.
Foreign investors also worry about profit repatriation. Restrictions and delays in accessing foreign exchange make it harder to move money in and out of the country.
Political instability and insecurity are also major risks. These factors create uncertainty and discourage investment. Investors fear asset loss or disruptions due to political unrest.
To restore Nigeria as a top investment destination, the government must stabilize the economy and improve political stability. The CBN must focus on policies that protect the naira and control inflation. Regulatory reforms alone won’t be enough.
Adonri believes the ISB 2024 is a big step forward. But without economic and political stability, investors will continue to prioritize safety over opportunity.