By Taofic Salako
WorldStage Nigeria’s Macroeconomic Outlook 2026– The Nigerian capital market closed 2025 on highpoints, setting new records domestically and ranking within the best-performing markets globally, in terms of returns. The All Share Index (ASI) of the Nigerian Exchange (NGX) – which doubles as Nigeria’s sovereign equities index – closed 2025 with a full-year return of 51.19 percent, equivalent to net capital gain of N32.13 trillion.
At 155,613.03 points, the performance of the NSE ASI more than doubled returns across several advanced and emerging markets, including the United States, United Kingdom, Germany, France and China where average indexed returns were below 25 per cent. The MSCI All Country World Index, a global index that tracks large-cap stocks across developed and emerging markets, closed the year with average return of about 20 percent.
The performance at the Nigerian market was driven by stronger inflows of foreign capital and steady domestic demand. The total transaction at the NGX doubled by 113.24 per cent to N11.92 trillion in 2025, as against N5.587 trillion in 2024. Foreign portfolio investors (FPIs) raised their participation by 211 per cent to close the year with a turnover of N2.65 trillion in 2025, the highest in the history of the market.
FPIs transactions rose from N852.03 billion in 2024 to N2.648 trillion in 2025. Domestic transactions also doubled from N4.73 trillion in 2024 to N9.27 trillion in 2025. A striking feature of the transaction cycle in 2025 was that foreign investors were more willing to retain their funds in Nigeria with more inflows than outflows.
With the rate of participation by FPIs increasing by 696 basis points in 2025, foreign inflows stood at N1.40 trillion as against outflows of N1.24 trillion. Inflows and outflows stood at N396.41 billion and N455.62 billion respectively in 2024. Retail investors continued to play major roles in the market liquidity, a point characterised by the dividend history of Nigerian quoted companies.
Turnover by retail domestic investors rose from N2.31 trillion in 2024 to N3.65 trillion in 2025 while institutional transactions increased from N2.42 trillion in 2024 to N5.62 trillion in 2025. The primary market also set new highpoint. Commercial paper issuances at the NGX clocked almost N1 trillion in 2025, with the largest chunk from unquoted, private businesses.
At the over-the-counter (OTC) market, total market capitalisation of securities listed on the NASD Securities Exchange rose by 106 percent to N2.12 trillion in 2025, from N1.029 trillion in 2024, reflecting both new listings and price appreciation. Listing activity remained a major growth driver during the year with the admission of Infrastructure Credit Guarantee Company Plc (InfraCredit), Paintcom Investment Nigeria Plc, and MRS Plc, alongside the listing of Access Bank Plc’s rights issue.
Combined, these transactions contributed approximately N1.121 trillion in new listings on the Exchange in 2025. In returns, the market was on the high side. The NASD Pension Index (NPI) climbed 215 percent to 3,002.68 points, compared with 954.33 points in the previous year. Beyond equities, NASD recorded strong traction in alternative funding instruments. Commercial paper admissions on the NASD exceeded N34.32 billion, signaling increased issuer and investor participation.
The outlook for the capital market in 2026 is expected to be shaped by several factors including sustained macroeconomic reforms, stable foreign exchange (forex), financial services recapitalisation exercises, especially banking recapitalisation, politics, new listings and government’s privatisation activities.
Early Bullish Start
With the equities market, the headlining segment for the capital market, closing short of the N100 trillion market capitalisation mark at N99.376 trillion in 2025, the market crossed the historic N100 trillion mark to N101.8 trillion in the first trading session of 2026. It has since rallied to about N120 trillion with average double-digit return of above 17 percent. But it’s still an early call.
Year 2026 is intriguingly loaded: a pre-election year, it is the first full fiscal year for the implementation of the new Investment and Securities Act (ISA) 2025 and the new Nigerian Tax Acts.
Newness comes with a risk, of uncertainty, of flips and flops. Where regulatory understanding differs with operators’ perception, such tautness often comes with visible market reaction. Especially in a market increasingly susceptible to foreign portfolios’ adjustments. Nigeria’s thrilling foreign capital destination is a gain in a stable macroeconomic environment, but it’s also a major risk in case of policy changes and new implementation.
This year also comes with the cumulation of major policies in the financial services industry, especially the recapitalisation programmes in the banking, insurance, pensions and capital market sectors.
The full extent of the recapitalisation exercises will dominate the first half of the market- in public and private equity raising, mergers and acquisitions, takeovers and splits. While most analyses expected less casualties in the banking sector’s recapitalisation compared to the previous exercises, there is still the fear of dilutions, distress sales and complete loss, in the event of regulatory takeover or forced liquidation.
These are the themes that will dominate the market in the months ahead. Still substantially undervalued relative to peers, the market obviously is running ahead of the economy in resilient forward-pricing. Such outlook tends to defy minor flops and fluctuations in fiscal and monetary environment. But a major misstep, in a pre-election year, will have more profound effect on the market.
Growth Prospects
The macroeconomic outlook is increasingly stable. There appears to be global consensus on overall direction of the Nigerian economy. The World Bank projects that Nigeria could see more than 7.0 percent growth in Gross Domestic Product (GDP), where ongoing reforms in the financial services sector catalyse the real sector.
Nigerian economy is projected to reach $1 trillion by 2030, driven by macroeconomic reforms, infrastructure investments, and growth in non-oil sectors. The capital market is expected to play a crucial role in mobilizing long-term funds for development projects and supporting economic growth.
Nigeria’s net foreign reserves have risen to $49 billion, providing greater buffer for stronger and stable naira. Compared with about $3 billion in May 2023, the external reserves position is the bulwark of support for the liquidity at the capital market. This direction is expected to continue.
Market Trends
The capital market is expected to remain active with double-digit return. Average equities’ return is expected at between 30 percent and 50 percent, stretching the market to its seventh consecutive positive run. The bullish outlook for the equities market is supported by stronger and steadier naira, monetary policy easing as inflation decelerates, higher corporate earnings, capital raising activities and new listings.
While the pre-election politics remains a downside risk, it is expected to have no notable impact on the overall direction of the economy and the capital market.
Nigerian market has broken its previous regressive pre-election pattern in previous circle, and 2026 is expected to sustain the new trend. The market has also broken its well-known previous cycle of decline in pre-election year to record its third consecutive positive performance in 2022, with full-year average return of 19.98 percent.
The earnings outlook remains positive. The banking sector is expected to remain profitable in 2026, with tier-1 banks delivering sustainable and steady returns. Post recapitalisation, the banking sector, the traditionally most active and major driver at the capital market, will see greater stability and creativity as banks compete to optimize capital, especially in the light of expected decline in fixed-income rates.
Besides banking, the general earnings outlook for the market is considerably exciting.
Despite concerns over new tax administration, quoted companies are generally expected to remain firmly on the upward trajectory with new expansions and recapitalisation driving growth. Several companies including Lafarge Africa, Dangote Cement, DEAP Capital & Management, Tantalizers, Nigerian Aviation Handling Company (NAHCO), Eterna and Champion Breweries have launched major expansion programmes in early drive that is expected to gather momentum by the third quarter of the year.
New Listings as Boosters
A major highlight for the capital market this year is the expected listing of several high-impact companies. These include 10 per cent landmark offer of the Dangote Refinery, Dangote Fertilizer Plant and fintech heavyweight Flutterwave. The early listing of Zichis Agro Allied Industries Plc signaled a subtle trend- small and medium enterprises opting for public quotation to drive scale.
The government privatisation programme is expected to be a major driver for new listings and capital market activities in 2026. The expected listing of the NNPC Limited, power distributing and generating companies (DISCOs and GENCOS) and other state-owned enterprises (SOEs) will expand the market depth and liquidity.
The federal government has confirmed impending unbundling of SOEs in 2026. There are more than 100 SOEs on the schedule for full or partial privatisation. Agencies such as the National Parks Service, Nigeria Film Corporation, the Federal Mortgage Bank of Nigeria (FMBN), and the Federal Housing Authority (FHA) have been watchlisted for private sector participation. With this, Nigerian equity market could see a meaningful expansion in depth, liquidity, volatility, and sectoral diversification.
Regulatory Developments
The Securities and Exchange Commission (SEC) is expected to continue its efforts to enhance regulatory oversight and safety in the capital market. The first full year for the implementation of the Investment and Securities Act (ISA) 2025, the market is expected to see firmer regulatory actions against weak points such as market abuse, insider dealing and fraudulent investment schemes.
With clarity and headroom for innovations, the ISA 2025 will have more profound impact on the market, providing a more conducive environment for investors. The removal of Nigeria from the FATF grey list is expected to continue to support stronger inflows of FPIs. The transition to a shorter trading settlement cycle, from four days, T+3, to three days, T+2, should enhance liquidity and price discovery.
The full implementation of the new Tax Acts, which started on January 1, 2026, will have less dramatic influence on the market. The Capital Gain Tax (CGT), which had created concerns and triggered a rundown of about N5 trillion in a day, has largely been muted, and more likely to be aligned with the general market perspective.
As political campaigns hot up, the strong position of pro-market President Bola Tinubu’s ruling party should continue to reinforce confidence. Besides, no major opposition figures appear to differ with overall architecture of the current macroeconomic reforms.
Key risks
Key risks remain the elevated cost of capital, inadequate power supply, the befuddled power play in the mid and downstream oil sector, especially with its influence on retail Premium Motor Spirit (PMS), the fragile fiscal space with concerns around government’s revenue generation and accumulating debts and uncertain global crude oil situation amid lower-than-projected domestic oil production. Pre-election pressures remain.
Overall, the outlook for 2026 is reassuring with expectations of stronger GDP growth, declining inflation, higher corporate earnings, improved returns and new listing opportunities.
*Extract from WorldStage Nigeria’s Macroeconomic Outlook 2026.
