Investors positive on reforms, worry about tax
Foreign investors are positive about Nigeria’s reforms but remain concerned about uncertainty surrounding the implementation of the 30% capital gains tax.
Foreign investors are becoming more positive about Nigeria’s economic reforms but remain concerned about uncertainty surrounding the implementation of the country’s 30% capital gains tax, investment firm Cordros has said. Cordros said fund managers it met during a recent engagement viewed Nigeria more favourably than in 2023 but were frustrated by limited communication on the new tax regime, which took effect in January 2026.
Many foreign funds remain net sellers of Nigerian equities despite the market’s nearly 60% year-to-date gain. Investors also raised concerns about banking regulations, including the 45% cash reserve requirement and rules on holding-company recapitalisation. They questioned whether the current reform momentum would continue after President Bola Tinubu’s administration, with the 2027 elections a key concern.
However, investors said Nigerian equities were not overvalued and expressed interest in banking, telecoms, oil and gas, and consumer stocks. Cordros said greater policy clarity could help attract foreign capital.
The message from investors is clear: they like the direction of travel but need clarity on the destination. The 30% capital gains tax, the 45% cash reserve requirement and the uncertainty around the 2027 elections are all factors holding back foreign capital. The Nigerian government must address these concerns if it is to attract the investment it needs.
This echoes the 2019 investor concerns about policy uncertainty, which also held back foreign investment. The mechanism then was different, but the result was the same: a gap between reform rhetoric and investor confidence.
The winners: the Nigerian government, if it addresses investor concerns; and investors, who may find attractive opportunities. The losers: the Nigerian economy, which misses out on foreign capital; and the Nigerian public, who suffer from the consequences.
Bottom Line: Investors like the reforms but fear uncertainty. The government must provide clarity to unlock capital. The question is whether it will or let the opportunity slip.