Why investors are pouring money into Nigeria again

In a world rattled by war, inflation, and erratic trade policies, some of the savviest investors are quietly shifting their attention back to Nigeria.

You wouldn’t guess it by looking at the headlines. Conflict in the Middle East, volatile oil prices, and an uncertain global economy have kept financial markets on edge. The World Bank just downgraded growth projections for most developing countries. But there’s one outlier: Nigeria.

While other countries brace for impact, Nigeria is being tipped as one of the few bright spots. And big money is noticing.

CardinalStone’s mid-year outlook increased its bet on Nigerian assets, moving from a 65:35 local-to-global portfolio split to a more bullish 70:30 ratio. This is because Nigeria, despite its many challenges, is showing signs of resilience and opportunity that global markets currently lack.

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Playing the local card

In the report, analysts at CardinalStone made a case that might surprise even the most skeptical observers: Nigeria’s homegrown reforms are beginning to reshape its economic landscape, at least from a market perspective.

Their portfolio now leans more heavily into Nigerian fixed-income instruments. About 30 percent goes to fixed-income instruments, up from 25 percent, citing falling inflation, potential interest rate cuts, and exchange rate stability. This pivot is driven not by love for Nigeria, but by data.

Inflation is starting to cool. The naira, once in freefall, is finding its footing. And while many economies are still stuck in ‘wait and see,’ Nigeria’s reform-driven momentum is giving investors something to work with.

“We are seeing relative FX stability and moderating yields,” the analysts noted. “This supports increased duration exposure,” CardinalStone said, implying that local bonds are finally starting to look like a good bet again.

Beyond stocks and bonds: Hedging with real assets

With global markets still jittery, CardinalStone is pouring more money into real assets, things like infrastructure, real estate, and commodities that don’t swing wildly with tech stocks or crypto crashes. These now make up seven percent of the recommended global portfolio, up from five percent.

Think of this as a seatbelt in a bumpy ride. Real assets don’t promise instant returns, but they tend to hold their value when everything else is crashing. In Nigeria’s case, infrastructure investing isn’t just a hedge, it’s a necessity.

The country’s power grid, roads, hospitals, and internet infrastructure remain underdeveloped. But that also means the upside is massive.

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Stocks: home advantage

Despite global selloffs and war-driven uncertainty, Nigerian equities have stayed surprisingly attractive. The report points to strong macroeconomic signals, stable oil production, easing inflation, and improving GDP as reasons to be bullish.

Nigerian stocks currently trade at a discount compared to peers, but that’s changing. The report forecasts a 32.2 percent return for Nigerian equities in 2025, with risk-adjusted returns better than almost any other African market.

Foreign Portfolio Investors (FPIs) are taking note. They pumped $8.05 billion into Nigeria’s markets in the first half (H1) of 2025 alone, nearly matching the full-year inflow for 2024. At this rate, 2025 could break records.

“Despite rising external risks, Nigeria’s story is beginning to attract foreign capital again,” the report said.

What about rest of the world?

Globally, it’s a different picture. CardinalStone is keeping exposure to global equities low, just 10 percent due to valuation concerns and political tensions. Instead, the focus is on defensive stocks like consumer staples and utilities, the kind of companies that sell you toothpaste and keep your lights on. Boring, but dependable.

In fixed income, the firm is steering clear of long-term U.S. bonds, which are more sensitive to inflation. Shorter-term bonds and select emerging markets offer better value.

The strategy is clear: Be cautious abroad, but go long on Nigeria.

What does this mean for everyday Nigerians?

At a glance, this may sound like a conversation only fund managers care about. But asset allocation strategies like this shape how capital flows into the country and who benefits.

When foreign money returns, it boosts liquidity, strengthens the naira, and makes it easier for local companies to raise funds. That can translate into more jobs, more production, and eventually more disposable income.

But for that to happen, the government must stay the course. Reforms can’t stall. FX transparency, lower inflation, and solid infrastructure remain non-negotiables. Any reversal on interest rates, fiscal discipline, or capital controls could derail the momentum.

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Business confidence rising

Business confidence grew for the sixth consecutive month in June 2025, according to NESG-Stanbic IBTC Business Confidence Monitor (BCM).

The Current Business Index rose to 113.6 points in June, up from 109.8 points in May 2025 as overall business conditions improved on easing macroeconomic fundamentals.

“Businesses in Nigeria maintained a positive performance streak for another month, as the BCM Index stayed in the expansion region for the sixth consecutive month in 2025,” the report stated.

“This performance is attributed to several tailwinds, including easing inflationary pressures, improved investor confidence and climate, and stronger business resilience across key sectors.”