Nigeria’s investment profile is witnessing a significant revival as international investors and global institutions laud recent monetary and structural reforms championed by the Central Bank of Nigeria (CBN) and federal authorities.
Michael McGaughy, founder of the Research Alpha Fund and a seasoned Asia-Pacific investor, credited Nigeria’s transformation to a mix of bold economic reforms—including currency liberalisation, fuel subsidy removal, and power sector deregulation—spearheaded under the administration of President Bola Tinubu.
McGaughy, whose fund has been invested in Nigerian equities since 2017, described the recent policy shifts as “a developmental economist’s dream,” noting that these actions are unlocking long-term value and repositioning the country as a top frontier investment destination.
Speaking in an interview with Asian Century Stocks, McGaughy aligned with recent Fitch Ratings and the International Monetary Fund (IMF), both of which acknowledged the impact of CBN-led reforms on restoring macroeconomic stability.
“Nigeria’s turnaround began with the decisive reforms of 2023. From eliminating multiple exchange rates to ending the distortive petrol subsidy, the administration has reset the economic fundamentals,” McGaughy noted.
He also praised the launch of the 650,000bpd Dangote Refinery as a milestone, easing foreign exchange pressure by curbing the importation of refined fuel products.
Under the leadership of Governor Olayemi Cardoso, the CBN has raised the benchmark interest rate by 875 basis points to 27.5% to curb inflation and strengthen investor confidence. A major win was the elimination of the multiple exchange rate system and the adoption of a transparent “willing-buyer, willing-seller” FX trading model through the B-Match platform.
According to the IMF’s recent Article IV Consultation report, these monetary policies have led to a surge in FX inflows—rising to $6.9 billion in Q1 2025—and pushed external reserves to $40.9 billion by the end of 2024. Additionally, the exchange rate premium between the official and parallel markets has narrowed drastically from over 60% to below 3%.
“Reforms to the FX market and foreign exchange interventions have brought stability to the naira,” the IMF stated, affirming that Nigeria’s macroeconomic outlook is stabilising.
As a result of the positive macroeconomic outlook, Nigeria’s All Share Index (ASI) has been climbing steadily, defying weak global oil prices. McGaughy revealed that several of his fund’s holdings have doubled over the past 6–12 months, attributing the performance to improving corporate fundamentals.
“Firms are regaining pricing power, and income statements are beginning to reflect this,” he said.
Despite the rally, Nigerian equities remain attractive. “Most companies still trade below 10x earnings. Many stocks are 70–90% off their all-time USD highs. Our favourite non-bank financial stock trades at 3x earnings and offers a 5% dividend yield,” he added.
McGaughy concluded that Nigeria offers “better value than any Asian market today,” though he also expressed cautious optimism, urging for sustained policy implementation.
In January 2025, Nigeria successfully returned to the Eurobond market for the first time in four years. The IMF acknowledged this as a signal of “renewed portfolio inflows” and “strengthened investor confidence,” reinforcing that Nigeria is regaining global credibility.
Reacting to the IMF’s report, CBN Governor Cardoso said, “At a time of global uncertainty, this assessment reaffirms that responsible, forward-looking policy choices matter. It affirms that Nigeria is regaining credibility, anchoring expectations, and laying the foundation for inclusive, long-term growth.”
As Nigeria continues to implement critical economic reforms, foreign investors are regaining trust in the market. With structural changes now showing impact across FX, equities, and macroeconomic indicators, the country is well on its way to becoming a magnet for long-term capital.
Experts say continued fiscal discipline, market liberalisation, and deepening of capital markets will be crucial to maintaining this momentum and unlocking Nigeria’s full investment potential.