This week, we spotlight the recently published Q3:2025 capital importation data and the January 2026 CPI report, alongside our outlook for the upcoming MPC meeting. According to the NBS, capital inflows into Nigeria rose to $6.0bn in Q3:2025, up 17.5% q/q and 380.2% y/y. This marks the strongest quarterly print since $6.1bn in Q2:2019. On a cumulative basis, 9M:2025 inflows reached $16.8bn, the highest level since the comparable 2019 period ($20.2bn), supported by improving macro conditions and policy dynamics.
For context, capital importation captures entry of financial and physical capital into a country via banking and customs records. These inflows expand the capital stock available to drive economic growth and often serve as a litmus test of an economy’s health and international investment competitiveness. By capital type, portfolio investment surged 15.6% q/q and 439.7% y/y to $4.9bn, driven by robust appetite for equities (+126% q/q and 287.4% y/y) and bonds (235.4% q/q and 2,154.7% y/y). Despite a 17.7% q/q softening of inflows to money market instruments, investment was up 296.2% y/y. Consequently, 9M portfolio inflows expanded 225.6% y/y to $14.3bn, representing 85.0% of total capital (vs 60.5% in 9M:2024). This performance was buoyed by money market inflows of $10.7bn (64.0% of total capital inflow).
Meanwhile, Foreign Direct Investment (FDI) saw a 107.6% q/q acceleration to $296.3m in Q3:2025. This momentum carried into the 9M:2025 results, with FDI up 123.6% y/y to $565.2m, accounting for 11.6% of total capital inflows. Conversely, Other Investment rose 11.2% q/q to $864.6m in Q3 but declined 24.9% y/y to $2.0bn over 9M:2025. The decline was largely due to 23.2% y/y contraction in loan volumes. Outside Banking and Finance sectors, Electrical emerged as the primary recipient of capital inflows during 9M:2025 ($710.3m or 4.2% of total flows). This was followed by Production/Manufacturing ($463.5m or 2.8%), Telecoms ($392.9m or 2.3%), Trading ($130.3m or 0.8%) and Agriculture ($116.1m or 0.7%).
On current momentum, FY:2025 capital inflows are tracking ahead of our initial $19.3bn projection. We now revise our forecast upward to $23.3bn, which would mark the strongest annual capital importation in six years. Asides favourable external tailwinds, the revision reflects a combination of currency stability, disinflation, and attractive yield dynamics on the domestic front in Q4. The Naira appreciated 4.8% q/q to average ₦1,451.70/$1.00 in Q4:2025 at the official window, while headline inflation moderated to 15.2% by Q4-end. At the same time, there was a gross OMO issuance worth ₦18.0tn in Q4:2025 alone, offered at competitive yields above 19.0%, reinforcing Nigeria’s carry-trade appeal to offshore investors. While the current FPI trend is commendable, we note that FDI represents a cheaper and more impactful form of capital for long-term economic growth. In contrast, FPI flows are more susceptible to external shocks and shifts in global risk sentiment. Accordingly, we reiterate our longstanding position that fiscal and monetary authorities should implement the necessary policy measures to fully unlock the potential of organic foreign exchange inflows — particularly within the non-oil sector — by promoting value addition in agriculture and manufacturing, as well as strengthening the talent and tourism industries.
Moving on, the NBS reported that headline inflation held steady at 15.1% y/y in January 2026, compared to 15.2% in the prior month, and well below our 19.3% forecast. The stable annual print was underpinned by a sharp 2.9% m/m deflation in January (Dec: +0.5%), mirroring the 2.8% price decline reported for January 2025. Across components, the NBS reported an atypical decline in food (-6.0% m/m), core (-1.7% m/m), and energy (-3.1% m/m) prices. This drove single-digit annual food inflation of 8.9%, while core inflation eased to 17.7% y/y and energy prices increased 11.2% y/y. Looking ahead, our model – based on recent price dynamics – points to a 1.6% m/m reinflation in February. Nonetheless, annual headline inflation is likely to moderate further to 14.6%, largely reflecting favourable base effects.
Against this backdrop and other favourable domestic & external macro-indicators pivot, we anticipate a modest policy easing of 50-100bps at the MPC meeting slated for February 23 and 24, 2026. We anchor our view on eleven consecutive months of moderation in inflation to 15.1% in January 2026. This disinflation trend, alongside sustained accretion to external buffers (FX reserves up 2.4% since November to $47.8bn), continued Naira appreciation (up c.6.7% to ₦1,355.00/$1.00 in the official market), and stable energy goods prices (notably, PMS), provides the CBN with latitude for policy flexibility. Additionally, growing expectations of rate cuts across major advanced economies in H1:2026 further improve the external backdrop for easing. Furthermore, the November 2025 MPC split (5 to 6 vote) indicates a committee increasingly receptive to policy normalisation. From a growth perspective, we estimates Q4:2025 GDP growth to print between 4.3% and 4.5%, implying full-year growth of 3.9% to 4.0%. Our outlook for Q1:2026 is also encouraging – a 3.4% to 3.7% in a base case.
With growth momentum holding relatively firm and inflation trending lower, the CBN appears to have sufficient latitude to deliver up to 100bps rate cut. Market pricing dynamics further reinforce this view. Recent activity in the NT-Bills market points to yield moderation, particularly at the long end of the curve, where yields have compressed by nearly 150bps to around 20.5%, reflecting expectations of a softer rate environment. That said, downside risks to a near-term rate cut remain. These include sizeable maturities in Q1 (estimated at approximately ₦11.0tn) and uncertainty surrounding the domestic financing mix of the 2026 fiscal deficit (projected at ₦23.9tn to ₦25.0tn), particularly given the delay in the passage of the 2026 budget by the National Assembly.
Domestic Equities Market: All Gains on Customs Street… ASI up 7.0% w/w
This week, trading activity on the local bourse ended on a positive note as the NGX-ASI advanced 7.0% w/w to close at 194,989.77 points. As a result, YTD return nudged higher to 25.3% (previously 17.2%) while market capitalisation rose to ₦125.2tn. Trading activity level faltered as average volume and value declined 12.4% and 46.3% w/w to 820.5m units and ₦28.3bn, respectively. The top traded stocks by volume were ACCESSCORP (344.2m units), ZENITH (248.2m units) and TANTALIZER (233.5m units), while the top traded stocks by value were ZENITH (₦19.1bn), GTCO (₦17.8bn), and MTNN (₦16.7bn).
Across our coverage sectors, performance was bullish as all sectors closed in positive regions. Leading the pack, the Industrial Goods and Oil & Gas indices gained 10.1% and 8.7% respectively, buoyed by gains in WAPCO (+11.4%), DANGCEM (+10.1%), SEPLAT (+8.3%) and ARADEL (+9.7%). Similarly, the AFR-ICT and Consumer Goods indices nudged higher by 6.3% and 6.1% on the back of price increases in MTNN (+10.0%), CUTIX (+6.2%), NASCON (+24.1%) and NESTLE (+16.5%). Increased buying interest in FIRSTHOLDCO (+12.1%), STANBIC (+9.5%), LASACO (+17.5%) and NEM (+6.1%) pushed the Banking and Insurance indices higher by 5.7% and 4.7% w/w, respectively.
Investor sentiment, as determined by market breadth, weakened to 0.8x (previously 1.2x) as 69 stocks gained, 40 lost while 35 remained unchanged. The top gainers for the week were ZICHIS (+60.7%), JAPAULGOLD (+60.2%), and INFINITY (+59.1%) while RTBRISCOE (-20.8%), MECURE (-19.0%), and TRIPPLEG (-18.8%) were the top losers for the week. Next week, we expect the market dynamics to remain bullish in the absence of any negative triggers while we await the outcome of the MPC meeting.
FX Market: Naira Strengthens Across Windows
This week, the benchmark Brent Crude Oil price advanced by 5.7% w/w to settle at $71.58/bbl, driven by renewed tensions between Washington and Tehran. The tensions in the Middle East arose due to threats of possible military actions by President Trump if Iran fails to agree to a nuclear deal. These concerns lifted oil prices as market feared a potential supply disruption via the Strait of Hormuz (a key route for global oil flows).
On the domestic scene, CBN foreign reserves advanced 1.5% w/w to settle at $48.5bn (as of 17/02/2026). The domestic currency had a positive trading performance during the week as the Naira strengthened by 7.9% and 0.7% against the green back at the parallel and NAFEM windows respectively to exchange at ₦1,330.00/$1.00 and ₦1,346.32/$1.00 accordingly. As such, the spread between parallel market and NAFEM rates declined from ₦77.22 to -₦16.32 this week. In the coming week, we expect the Naira to trade in similar band as the currency fundamentals remain bullish in the short-medium term, underpinned by CBN’s continued liquidity boost and improved activities with strategic domestic oil refining.
Money Market: Bullish Outing on T-Bills Despite Tight Liquidity
System liquidity remained in deficit, closing at ₦2.0tn short, improving from the ₦4.2tn shortfall recorded in the previous week. The sustained tightness was reflected in elevated Standing Deposit Facility placements of ₦2.0tn, highlighting selective liquidity pockets within the system. On the interbank funding front, the OPR remained unchanged at 22.5% while the OVN rate edged down by 7bps to 22.7%.
At the T-bills PMA conducted by the CBN, demand was strong with an overall bid-to-offer ratio of 3.7x as the offer worth ₦1.2tn was met by ₦4.3tn subscription. The interest was heavily concentrated on the 364-day bill with a 5.1x bid-to-offer ratio (Subscription: ₦4.0tn, Offer: ₦800.0bn). Meanwhile, the 91-day (Offer: ₦150.0bn, Sub: ₦112.0bn) and 182-day (Offer: ₦200.0bn, Sub: ₦93.7bn) bills were undersubscribed with bid-to-offer ratios of 0.7x and 0.4x respectively. Eventually, the 1-year stop rate declined sharply by 108.7bps to 15.9%, reflecting aggressive bidding and investors’ preference to lock in longer-dated risk-free yields amid expectations of rate cut at the next MPC meeting. The 91-day rate eased marginally to 15.8%, while the 182-day remained unchanged at 16.6%.
Trading in the secondary T-Bills market closed bullish, with average yields across benchmark tenors declining by 25bps to 17.4%, as investors shift their attention to the secondary market after the mid-week primary auction. The most significant yield movements were observed in the long- and short-term instruments, which fell by 50bps and 18bps, respectively, while medium-term yields eased by 6bps. The softening in yields was supported by continued demand from investors seeking secure, short-term investment avenues amid ongoing liquidity tightness, as well as portfolio adjustments ahead of upcoming monetary and fiscal developments. Looking ahead, sustained investor demand for risk-free instruments is expected to keep short- and long-term yields under moderate downward pressure.
Afrinvest
