Nigeria’s Economy Maintains Momentum as Markets Stay Selective

Recent economic and market data point to an economy that continues to hold its ground, even as financial markets send mixed but informative signals. Growth remains steady rather than spectacular, but improving macro stability and selective investor confidence are shaping Nigeria’s investment landscape as the year progresses.

The Big Picture: Growth Continues, Momentum Moderates

New data from the National Bureau of Statistics (NBS) shows that Nigeria’s economy expanded by 3.98% year-on-year in Q3 2025, marking a modest improvement from 3.86% in Q3 2024, though slightly slower than the 4.23% growth recorded in Q2 2025.

Nigeria also completed a long-awaited GDP rebasing exercise, updating the base year from 2010 to 2019. While this revision provides a more accurate reflection of the economy’s current structure, it does not materially alter underlying economic realities.

Growth remained broad-based across key sectors:

• Services, now contributing over 50% of GDP, continued to anchor expansion, supported by trade, transport, and financial services.
• Agriculture, accounting for roughly 31% of output, delivered resilient performance, reinforcing its role as a stabilising force.
• Industry contributed steadily, with modest manufacturing gains complemented by a rebound in mining and quarrying, particularly coal production.

Overall, the economy recorded an average growth rate of 3.78% in the first three quarters of 2025, prompting a revised full-year growth outlook of approximately 3.9%, broadly in line with IMF projections. While this confirms continued recovery, growth remains below the level required for structural transformation and broad-based prosperity.

Equities Market: Gains Driven by Selective Positioning

The Nigerian equities market closed the week higher, with the NGX All-Share Index rising 1.63% to 149,436.48 points, lifting total market capitalisation to ₦95.26 trillion.

Despite the positive close, trading activity moderated, with 4.37 billion shares valued at ₦97.78 billion changing hands. Nonetheless, the recent gains were driven more by selective buying amid a broad-based increase in risk appetite and continued bullish sentiment.

Sector Performance: Rotation, Not Exit

Sectoral performance reflected clear investor rotation:

• Insurance led gains (+3.40%), supported by strong rallies in Sovereign Trust Insurance and Coronation Insurance.
• Consumer Goods followed (+2.64%), driven by renewed interest in PZ Cussons, McNichols, and Dangote Sugar.
• Industrial Goods posted modest gains (+0.23%), aided by selective accumulation in construction-related names.
• Banking edged lower (-0.12%) as profit-taking in select tier-one and mid-tier names offset gains elsewhere.
• Oil & Gas was the weakest sector (-0.13%), weighed down by losses in select downstream stocks.

This dispersion underscores that investors are repositioning portfolios rather than exiting the market entirely.

Fixed Income: High Yields Signal Persistent Risk Pricing

System liquidity tightened during the week, declining to ₦2.72 trillion from ₦3.20 trillion, although interbank rates remained relatively stable.

At the primary market, Treasury Bills auctions recorded strong demand, particularly at the long end, with the 364-day bill clearing at 17.95%. OMO auctions also attracted significant interest, with allotments exceeding the initial ₦600 billion 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. Overall, the fixed income market continues to await clear rate directions from the CBN and the DMO in subsequent auctions.

FX and Reserves: Buffer Strengthens, Pressure Persists

The naira weakened marginally at the official market, closing the week at ₦1,454.41/$, highlighting ongoing foreign exchange pressures.

Encouragingly, Nigeria’s external reserves climbed above $45 billion, one of the strongest positions since 2019. The steady accumulation suggests sustained inflows rather than one-off gains, providing a stronger buffer against external shocks. However, this improvement does not yet translate into immediate relief for inflation or cost-of-living pressures.

What This Means for Investors

As the year progresses, the investment landscape presents a balanced mix of caution and opportunity:

• Equities: Steady economic growth and selective sector strength suggest scope for continued rotation into fundamentally sound names offering value after recent corrections.
• Fixed Income: Elevated yields remain attractive for income-focused investors, although volatility is likely to persist as the CBN actively manages liquidity.

Bottom Line

Nigeria’s economy is expanding steadily, supported by services and agriculture, while financial markets reflect cautious but sustained investor engagement. The environment calls for disciplined positioning: selective exposure to equities for growth potential, complemented by fixed income to capture attractive yields and manage risk.

Staying informed and flexible remains essential as macro conditions continue to evolve.