A market responding to reform
The Nigerian stock market’s performance in 2025 signifies that the financial system is at closing responding to the reforms of the closing two years. We private witnessed a important bull skedaddle. Because the “nose” of the financial system, the stock market is continually the first to “smell the coffee”. Because it adjusts rapid to prices and serves as a hedge against inflation, “trim money” continually flocked right here in times of inflation.
The figures remark an extraordinarily good chronicle. The market closed 2025 with a return of 51.19%, one amongst its simplest performances in years. The Composite All-Piece Index reached an all-time high of 155,613 foundation parts, whereas market capitalisation approached N100 trillion. These are noteworthy numbers for an financial system present process refined structural adjustments.
Particularly, this enhance is ample-based mostly across all sectors, at the side of user goods, industrials, and insurance. Even the banking sector remains resilient no topic regulatory rigidity, recapitalisation requirements, and a focal point far flung from international substitute (FX).
The foundation of enhance: Naira and subsidy reforms.
The basics are of path so strong that 2026 may well possibly moreover match or even surpass closing One year’s performance, barring any unforeseen events. This enhance is powered by two necessary authorities reforms: the realignment of the naira with the market and the elimination of gas subsidies.
These policies firstly triggered a mark spiral and pushed inflation to 30% on the originate of 2025. This was the “bitter treatment” the financial system required. The resulting hardship was largely resulting from delaying these choices for see you later. Whereas these effects will linger as the final public adjusts, corrective benefits are taking root.
A functioning international substitute market.
We now private a functioning FX market where $8 billion is traded monthly, translating to about $100 billion in a One year. That is better than double our most recent reserves of $forty five billion. This day, anyone need to private FX for their wants, and the market has extra various sellers than ever forward of and is becoming extra liquid.
In a ancient shift, rude oil not accounts for 80%–90% of our international substitute earnings; it now represents handiest about 25%. This isn’t because oil receipts private plummeted, but because other sectors private stepped up.
A competitive naira has empowered local producers.
Rob “Titi”, a manner dressmaker in Owo. She makes clothes for Borda Abiodun in the UK and Sister Atinuke in the US and their associates. Because native dressmaker wear is now a staple of diaspora weddings, she clears roughly $400,000 a One year in her domiciliary myth.
Previously, folk fancy Titi held onto greenbacks, anticipating the Naira to lose mark. That has not took place currently, so she now sells her greenbacks as rapid as she can to her bank. These transactions produce not even disclose up in our legit export substitute files. They’re mostly, one-on-one, private transactions.
Now, since the Naira is appreciating, exporters are rushing to sell their greenbacks for Naira. Reports counsel the market converts over $200 million in domiciliary myth proceeds day-to-day.
Equally, Nigerian user goods companies are competing to be low-mark producers in Africa. Due to AfCFTA. They’re exporting merchandise fancy Lux and Omo and other private merchandise to Tanzania, Uganda, and Gabon, competing without prolong with goods from the UK and France.
And there may well be the cocoa enhance; Nigeria is competing with Ghana and the Ivory Cruise for the main cocoa producer in Africa. Many other agricultural merchandise private also now joined standard exports, earning greenbacks and promoting to our FX market.
Steadiness of funds and regulatory steadiness.
The Central Monetary institution only currently reported a definite steadiness of funds figure of $6.8 billion on the slay of 2024. We are importing less and private efficiently diminished “round-tripping” and FX padding schemes. Critics who claim the reserves are synthetic or that the CBN is subsidising the market are inaccurate. Any CBN intervention to fund the retail slay of the market is executed at market mark; even Bureau de Trade operators pay the same price as every person else.
As for the gas subsidy elimination, the resources formerly dilapidated in subsidy funds private now long gone to inflate budgets the least bit ranges – federal, convey and local governments – as viewed in FAAC monthly allocations, to present for social welfare programmes, fancy colleges, healthcare and infrastructure. That is unimaginative in coming for the time being, but this is in a position to perchance possibly moreover near.
Fuel prices that rose to N1100 in the center of 2024 now sell for N790 per litre. And gas queues private disappeared. The implication for our financial system in this regard goes to be a in point of fact powerful in bringing down inflation and bettering meals distribution.
We also now inspire from oil mark movements; if the international mark goes up, our rude oil receipts trip up, and if it goes down, our domestic gas prices trip down. Unlike forward of, after we suffer, no topic what happens.
In my published article of twenty first September, 2023, when the Naira first crossed the N1000 impress,
I wrote …” I private continually been a prolonged-term advocate of letting the naira fetch its mark in the market. I have not modified my mind; there are all forms of concerns with letting market forces work to fetch the accurate mark. We must rep to a diploma where the associated price of procuring for greenbacks will substitute our financial system for just. That is how economics works. First, this would possibly be rough forward of it gets better.
I persevered, “We are at that important point now. In say to rep the gains, we must dwell the path.” I speculated, for the first time, that the naira may well possibly moreover substitute around the N1500 impress, because similar currencies, with even better fundamentals, fancy the South Korean currency, the “received”, were procuring and selling for 1350 to the greenback.
I then concluded that we may well possibly moreover calm note this as our “American Nixon moment” when, on August 15, 1971, President Nixon severed the hyperlink between the US currency, the Buck and gold…greenback, declaring that henceforth, the American financial system will now lend a hand the greenback.
That is what our Central Monetary institution has carried out now; our capability to keep greenbacks will settle what mark is positioned on the naira. We may well possibly moreover calm pursue reforms and rep the financial system to work effectively and let the naira by no arrangement rep to where its mark is procedure by anything but the market.
Because the total financial system improves, the stock market is poised to develop true into a extra powerful engine to form wealth this One year resulting from a convergence of many definite initiatives which will seemingly be all working together to present a enhance to the market.
The ten-One year capital market grasp notion.
The market’s success is bolstered by a most recent world-class regulatory ambiance. The ten-One year Capital Market Grasp Opinion, launched in 2015, has viewed the implementation of most of its landmark propositions. As Chairman of the “Market Building” sub-committee, I will testify to the thoroughness of this work. This notion aimed to deepen the market by growing scale, transparency, and investor self assurance. These efforts are further bolstered by the newest passage of the Funding and Securities Act 2025 (ISA 2025). The results are already evident; companies listed on the NGX declared N1.1 trillion in dividends closing One year, making the NGX one amongst the field’s high-performing markets for Return on Funding (ROI).
The unique One year, 2026, gifts many opportunities.
The arriving One year promises high exercise, with several Mergers and Acquisitions (M&A) plans, with important unique listings on the horizon. Corporations fancy the Dangote Refinery and seemingly the NNPC are anticipated to listing this One year. The authorities will seemingly be anticipated to monetise some of its resources by arrangement of privatisation, because it targets a $1 trillion financial system by 2030.
On the opposite hand, opportunities near with dangers. The supreme possibility is political instability and insecurity that must now be tackled or possibility undermining the financial system greatly.
To withhold this momentum, reforms must continue without being influenced by political concerns. As we enter the election season, monetary authorities must remain vigilant against injurious fiscal choices that will perchance moreover undo the progress of the closing two years.
Victor Ogiemwonyi is a retired investment banker and writes from Ikoyi, Lagos.
