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By Chukwuma Umeorah
In 2024, the Nigerian capital market demonstrated what industry analysts called remarkable resilience and adaptability.
The year was defined by major policy shifts, corporate actions and a challenging macroeconomic landscape, but the industry trudged on strongly.
The year was a turning point, marked by a resurgence in primary market activities and the far-reaching effects of regulatory reforms, which collectively shaped the market’s future direction. Stakeholders celebrated 2024 as a year of transformation, highlighting key developments such as the recapitalization of the banking sector, the automation of foreign exchange (FX) trades, and collaborative efforts to enhance market liquidity. Yet, the year was not without its hurdles; inflationary pressures and high production costs posed significant challenges, testing the resilience of real-sector companies and influencing investor behaviour.
Market performance overview
The Nigerian Exchange (NGX) began the year on a strong note, with listed equities delivering a 35.28 per cent return in January. The strong start sparked a renewed sense of confidence in investors which of course translated into increased activity on the local bourse. Market Capitalisation and All Share Index (ASI), which started the year at N40. 918 trillion and 74.773.77 points, hit N61.912 trillion and 102.133 points as at December 27, 2024.
This meant that the market had gained about N21 trillion within the year with a Year – to – date (ytd) return of 36.59 per cent. This further solidifies the nation’s bourse as one of the leading exchanges globally in terms of return.
By the end of November, total domestic and foreign portfolio transactions in the Nigerian equities market, the Nigerian Exchange Limited (NGX) had reached N4.913 trillion, according to the Domestic & Foreign Portfolio Investment Report. This represented a 47.12 per cent increase from the N3 trillion recorded during the same period in 2023. Foreign transactions stood at N785 billion doubling the N362.7 billion within the same period of the previous year.
However, the market experienced fluctuations. Domestic transactions accounted for the majority of trading activity, as foreign investor participation remained subdued due to concerns about currency volatility. November saw a 12 per month-on-month decline in transactions to N422 billion, though it remained significantly higher year-on-year compared to N300.67 billion in November 2023.
Key drivers of market growth in 2024
Several factors propelled the market’s performance during the year, as highlighted by market operators.
Banking recapitalisation
One of the most significant drivers was the Central Bank of Nigeria’s (CBN) directive on banking sector recapitalisation. Banks were required to bolster their balance sheets to meet higher capital thresholds by 2026: N500 billion for international banks, N200 billion for national banks,l and N50 billion for regional operators.
The policy spurred a wave of capital-raising activities in the banking sector. Hybrid offers, rights issues, and new listings injected liquidity into the market and revitalized investor interest.
The Chief Executive Officer of Crane Securities, Mike Eze, explained, “A lot of shares, those who are already shareholders in these banks, were now given extra shares. And then it translates into activity in the market space. Some of these recapitalisation offers are still ongoing, with several banks yet to close their programmes.”
Banks like First Bank, UBA, Fidelity, and Zenith were at the forefront, with significant volumes of shares being issued.
Eze added, “This recapitalisation policy had about a 50 per cent positive effect on the market this year. It is one of the major factors that brought positivity to the market.”
Liberalisation and technological integration
The liberalisation of FX and energy pricing was another key policy initiative. While these reforms boosted transparency and investor confidence, they also had inflationary implications. Olatunde Amolegbe, the Chief Executive Officer of Arthur Stevens Asset Management, remarked, “On the macro level, the markets continued to respond positively to policies such as the liberalization of FX and energy pricing, though some sectors took them negatively.”
Amolegbe further emphasised the importance of automation in market operations: “The SEC’s reforms, particularly in digital assets regulation and technological integration, have significantly impacted market stability. Technology-driven policies are now at the forefront, ensuring transparency and investor protection.”
Increased primary market activity
The recapitalisation drive revitalised the equities primary market, which had been relatively flat in previous years. Additionally, the issuance of the first U.S. dollar-denominated domestic bond and the Federal Government’s return to the Eurobond market underscored the market’s growth potential. “These actions injected fresh capital and confidence into the system,” noted Amolegbe.
Sectoral highlights and challenges (financial sector)
The financial sector was undoubtedly a standout performer, buoyed by the recapitalisation exercise and increased investor activity. Banks leveraged the opportunity to raise capital, which not only strengthened their balance sheets but also enhanced overall market liquidity.
Navigating inflation and costs
While the financial sector thrived, the real sector faced significant challenges. Rising inflation and high production costs weighed heavily on companies in manufacturing, consumer goods, and related industries. “We lost bellwethers such as GlaxoSmithKline and Flour Mills of Nigeria, as these companies exited the market due to unsustainable operational costs,” said Amolegbe.
He stressed that the exit of these firms highlighted the difficulties faced by businesses grappling with reduced consumer purchasing power and higher financing costs.
Emerging opportunities
Despite these challenges, opportunities abound in sectors such as oil and gas, industrial goods, and telecommunications. Amolegbe predicted robust performance in 2025, driven by liberalization policies and potential tariff adjustments in the telecom sector.
“I foresee some sectors of the market, such as financials and oil and gas, doing extremely well in 2025. The industrial goods and construction sectors are also likely to benefit from increased economic activity,” he noted.
Enhancing investor confidence
The task of strengthening investors’ confidence and maintaining market stability cannot be achieved without the effort of the regulators. The Director General of the Securities and Exchange Commission (SEC) Emomotimi Agama had stressed the essence of collaboration with stakeholders and other regulatory arms of the market such as the Central Bank of Nigeria (CBN) and the NGX. According to him, “We must adopt a multi-faceted approach at strengthening the regulation that drives our market so as to achieve the goal of a $1 trillion economy by 2030. This cannot be done in isolation.”
SEC, during the period under review introduced several reforms aimed at improving market liquidity, reducing issuance costs, and strengthening investor protection.
Collaboration with buy-side agencies
Collaborative efforts with agencies such as the National Pension Commission (PenCom) and the National Insurance Commission (NAICOM) were instrumental in enhancing market liquidity. These partnerships encouraged greater participation from institutional investors.
Investments and Securities Bill (ISB)
Now in its final stages of contention at the Nigerian Senate, the proposed ISB was another milestone. It aims to bolster the SEC’s regulatory framework, ensuring greater market transparency and protection for investors. The bill, which repeals the Investments and Securities Act of 2007, seeks to align Nigeria’s capital market with global standards and protect investors from fraudulent practices.
The bill introduces stricter penalties for operators of Ponzi and pyramid schemes, mandating fines of at least N20 million or imprisonment for up to 10 years, or both. Amolegbe expressed optimism about the bill’s potential impact: “The passage of the ISB will strengthen the SEC’s hand in promoting investor protection and market transparency, which will, in turn, encourage foreign investment inflows.”
The NGX also played a vital role in advancing technology by introducing “NGX Invest”, an innovative e-offering platform to streamline the distribution of securities in the primary market, making it more accessible to a broader range of investors.
Stakeholder projections for 2025
Looking ahead, stakeholders anticipate a more stable macroeconomic environment and a positive outlook for the capital market. Eze highlighted the potential for reduced inflation and lower interest rates in 2025, which could spur investment and economic growth.
“There is what we call the buffer effect,” Eze explained. “This year, we were acquainting ourselves with new policies and regulatory oversight. Next year, I see more activities—both by local and foreign investors—translating into significant market impact.”
Sectoral opportunities
Amolegbe predicted continued growth in key sectors: “The financials, oil and gas, and industrial goods sectors are poised for strong profitability. The telecom sector could also see improved fortunes if tariff adjustments are implemented.”
While challenges such as inflation and high operational costs tested the limits of the market in 2024, strategic policy reforms and corporate actions laid a solid foundation for future expansion. As Eze aptly put it, “This year was about preparing the ground. Next year, we expect to see even more impact as activities ramp up across various sectors.” He emphasized that with a promising outlook for 2025, the market is well-positioned to build on the successes of 2024 and achieve new milestones.
