Nigeria’s Economy Maintains Momentum as Markets Stay Selective
Fresh economic and market data point to an economy that is holding its ground, even as financial markets send mixed but informative signals. While growth remains steady rather than spectacular, improving macro stability and selective investor confidence continue to shape Nigeria’s investment landscape as the year progresses.
The Big Picture: Growth Continues, but Momentum Softens
New data from the National Bureau of Statistics (NBS) shows that Nigeria’s economy expanded by 3.98% year-on-year in Q3 2025, reflecting a modest acceleration from 3.86% in Q3 2024, though slightly slower than Q2 2025’s 4.23% growth.
During the quarter, Nigeria also completed a long-awaited GDP rebasing exercise, shifting the base year from 2010 to 2019. This update provides a more accurate reflection of the economy’s current structure, though it does not alter underlying economic realities.
Growth was supported by activity across all major sectors:
- Services, now contributing over 50% of GDP, remained the dominant driver, underpinned by trade, transport, and financial services.
- Agriculture, accounting for roughly 31% of the economy, delivered resilient output, reinforcing its role as a stabilizing force.
- Industry contributed steadily with manufacturing recording modest gains, however, other major drivers include the rebound in mining and quarrying activities, particularly coal mining.
Overall, the economy recorded an average growth rate of 3.78% across the first three quarters of 2025, prompting a revised full-year growth outlook of around 3.9%, broadly aligned with IMF projections. While this confirms Nigeria remains in recovery mode, growth levels remain below what is required for broad-based economic transformation.
Market Performance: Equities Edge Higher Amid Selective Buying
The Nigerian stock market closed the week on a positive note, with the NGX All-Share Index rising by 1.63% to 149,436.48 points, pushing total market capitalization up to ₦95.26 trillion.
Despite the gains, trading activity moderated. Investors exchanged 4.37 billion shares valued at ₦97.78 billion, suggesting that price appreciation was driven more by selective positioning than broad-based risk appetite. This pattern points to cautious optimism rather than outright bullishness.
Sector Spotlight: Insurance and Consumer Goods Take the Lead
Sectoral performance during the week was mixed, highlighting investors’ preference for specific themes:
Top Performers
- Insurance led the market, advancing 3.40%, supported by strong rallies in names such as Sovereign Trust Insurance and Coronation Insurance.
- Consumer Goods followed closely, gaining 2.64%, driven by renewed interest in stocks like PZ Cussons, Mcnichols, and Dangote Sugar.
- Industrial Goods posted modest gains of 0.23%, aided by selective accumulation in construction-related names.
Underperformers
- Banking edged lower by 0.12%, as profit-taking in select tier-one and mid-tier banks offset gains elsewhere.
- Oil & Gas recorded the weakest performance, declining 0.13%, largely due to sharp losses in select downstream stocks.
The dispersion across sectors reinforces the idea that investors are rotating rather than exiting the market.
Fixed Income: High Yields Reflect Ongoing Risk Concerns
Liquidity in the financial system tightened during the week, falling to ₦2.72 trillion from ₦3.20 trillion, though interbank rates remained broadly stable.
At the primary market, Treasury Bills auctions attracted strong demand, particularly for longer-dated instruments, with the 364-day bill clearing at 17.95%. Similarly, OMO auction saw strong demand, particularly at the long end, with total allotments exceeding the initial ₦600bn offer and stop rates settling around 19.4%–19.5%.
In the secondary market, bond yields rose sharply across the curve, reflecting heavy sell-offs and continued investor demand for higher compensation amid macro risks. The fixed income market continues to price in tight financial conditions and policy uncertainty.
FX and Reserves: Stability Improves, Pressures Remain
The naira weakened slightly at the official market, closing the week at ₦1,454.41/$, highlighting lingering foreign exchange pressures.
On a more positive note, Nigeria’s external reserves climbed above $45 billion, one of the strongest positions recorded since 2019. The steady accumulation suggests sustained inflows rather than one-off gains and provides a stronger buffer against external shocks. While this development supports investor confidence and FX management, it does not immediately ease inflation or cost-of-living pressures.
What’s Next for Investors?
As the year progresses, the investment landscape presents a mix of caution and opportunity:
- Equities: The combination of steady economic growth and selective market strength suggests room for continued sector rotation. Investors may increasingly focus on fundamentally strong stocks that offer value after recent corrections.
- Fixed Income: Elevated yields continue to offer attractive income opportunities, though volatility remains high. Portfolio repositioning ahead of potential liquidity management actions by the CBN is likely.
The Bottom Line
Nigeria’s economy is growing steadily, not accelerating, supported by services and agriculture, while financial markets reflect cautious but ongoing investor engagement. For investors, the environment calls for balance: selective exposure to equities for growth potential, complemented by fixed income positions to capture high yields and manage risk.
Staying informed and flexible remains key as macro conditions continue to evolve.
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This article is based on recent economic data and market performance. Investors are advised to conduct independent research or consult financial advisors before making investment decisions.
