At Money Fair, Analysts Harp on Unlocking Domestic Investment

Omolabake Fasogbon 

Nigeria’s inability to effectively channel its vast domestic liquidity into productive investment has come under renewed scrutiny, with analysts warning that the country risks ceding economic control as foreign investors increasingly dominate startup and entrepreneurial funding.

Speaking at the Money Fair, experts highlighted a troubling disconnect within the financial system: despite a money supply estimated at about N124 trillion, total equity investment remains a mere N95 billion. This significant gap, they noted, continues to constrain access to capital for startups and poses a serious threat to Nigeria’s ambition of building a $50 trillion capital market by 2030.

The experts expressed this concern at the Nairametrics Financial Literacy Forum, tagged ‘The Money Fair,’ held recently in Lagos, where economic think tanks, capital market operators, pension fund administrators, the Securities and Exchange Commission (SEC), and other regulators gathered to chart a path forward for Nigeria’s financial markets.

In his address, Chief Executive Officer of Chapel Hill Denham, Bolaji Balogun stressed the need for stronger domestic participation in capital formation.

He described the imbalance in the financial system as troubling, noting that money market and bond funds hold about N7.25 trillion, while equity funds which drive entrepreneurship remain at N95 billion.

Balogun said this was unlike in the United States where retail investors allocate about 50 per cent of their portfolios to equities, a trend he said significantly drive household wealth creation.

“With limited risk capital and minimal equity investment, it is no surprise young entrepreneurs struggle to raise funds. If they continue to rely on foreign investors, we risk recolonising ourselves and waking up to see 70 to 80 per cent of Nigerian innovations owned by outsiders,” he warned.

Managing Director/Chief Executive Officer of Nigerian Exchange Group, Mr. Temi Popoola, also stressed that financial literacy and digital access remain key to improve domestic participation in the capital market.

Represented by the Group Chief Strategy Officer, Jumoke Olaniyan at a panel session titled “Nigeria Investor Outlook 2026–2027: Regulation, Politics, and Capital Positioning in a Reformed Era,” Popoola emphasised that improved literacy often translates to increased participation.

He noted that progress was being made in retail engagement, disclosing that nearly 300,000 investors had been brought into the market through the NGX Invest platform across 15 recent initial public offerings.

“Infrastructure now exists for any Nigerian to invest at the tap of a button. ETF investments on the exchange have grown by 100 per cent in recent years, driven by deliberate efforts in access and education,” he said.

Also speaking at the session moderated by Founder/CEO of Nairametrics, Ugodre Obi-Chukwu, Executive Commissioner for Operations at the Security Exchange Commission (SEC), Bola Ajomale described as a snag, the proliferation of unlicensed operators.

“We need to put a stop to this. Unless we do, there will continue to be a perception of weak governance and limited transparency in the market,” he said.

On pension fund participation, Head of Corporate Communications at the National Pension Commission (PenCom), Ibrahim Buwai said the commission actively shifted resources towards equities to hedge against inflation.

“Pension fund equity holdings rose from N3.9 trillion in December to N5.4 trillion by February, representing 18.8 per cent of total assets. This is driven partly by the Multi-Fund Investment Structure, which allows younger contributors to opt for higher-risk, higher-return portfolios,” he explained.

Meanwhile, Deputy Director and Head of Planning, Department of Strategic Services at the Nigerian Investment Promotion Commission (NIPC), Abdullahi Shiru, said Nigeria has continued to attract strong foreign direct investment (FDI) despite low domestic equity participation.

“FDI inflows increased from $90 million in Q1 2025 to $720 million by Q3, driven by policy reforms, macroeconomic stability and improved regulation. While foreign capital is important, it should not overshadow domestic ownership and entrepreneurship,” he cautioned.

Stakeholders at the forum agreed that while Nigeria’s regulatory framework remains viable for investment, sustained efforts are required to strengthen market structures, improve transparency and reinforce investor protection to rebuild trust.

Earlier, Obi-Chukwu said the fair was designed to move Nigerians from merely consuming financial information to taking informed financial decisions, especially amid prevailing economic uncertainties.