Mirage or Measurement? Putting Nigeria’s Stock Market to the Dollar Test

Dave Adekunle

I read an essay titled: ‘Tinubu’s Fake Economic Theory and The Stock Market: Why His Booming Economic Claim Is Delusion of Grandeur.’  The essay arrived in my inbox the way most Nigerian economic commentary now travels — forwarded three times, stripped of its date, and considerably angrier by the time it reached me. Its argument was that our stock market rally is an optical illusion. Devalue the naira by two hundred per cent, and every dollar-linked asset automatically “becomes” three times more valuable in local currency. The owners become naira billionaires on paper. No factory opens. Nobody is hired. Balance-sheet wealth, not pocket wealth. Portfolio racketeering dressed up as prosperity.

I read it twice, and I want to say at the outset that it is a good argument. It is not abuse, it is not tribalism, and it is not the usual noise. It is a causal claim about how a number was produced, and it deserves the compliment of being taken seriously.

Taking it seriously means testing it. Because the argument has a property that most of our public commentary conspicuously lacks: it is falsifiable. If the rally is currency arithmetic, then strip out the currency and the gains should disappear.

That test is not hypothetical. It is run continuously, by Bloomberg, across ninety-two benchmark indices worldwide, and it is run in United States dollars.

What the Dollar Screen Shows

On 10 July 2026, the Nigerian Exchange All-Share Index became the best-performing equity index on earth in dollar terms — about 67 per cent year to date, displacing South Korea’s KOSPI. Nigeria held that position for roughly five weeks. By 14 August, after a sharp Korean rebound, the NGX ranked third of 92 markets, up 65.23 per cent in dollars, behind the KOSPI at 68.52 and Ghana’s GSE Composite at 66.68.

Anyone who has ever run a book in a frontier market understands immediately why this is decisive. A dollar return is a post-translation figure. It is what survives after the exchange rate has finished with you. Depreciation does not flatter a dollar return — it destroys one. That is precisely why the KOSPI’s own standing has been dragged down by a won that weakened around five per cent this year. And it is precisely why Nigerian equities were, quite justly, mocked in 2023 and 2024 for producing local-currency gains that evaporated the moment you tried to take money out.

I made that criticism myself, at the time. It was correct at the time. It is now describing a market that no longer exists. The naira has appreciated roughly four per cent against the dollar in 2026, after appreciating about 5.9 per cent across 2025, supported by better foreign exchange liquidity, higher reserves and a narrower parallel-market spread. Currency movement is now adding to international returns rather than eating them.

So the question has to be put directly: if this is devaluation arithmetic, where is the devaluation?

The Hot-money Charge and the Participation Data

The second pillar of the critique is that this is foreign portfolio money — fast, fickle, one rate cut from the door. That is also an empirical claim, and it also has an answer.

In the first half of 2026, domestic investors accounted for approximately 89 per cent of participation and transaction value on the Nigerian Exchange. Foreign investors accounted for about 11 per cent. This is, on the available evidence, among the most domestically-owned major equity rallies anywhere in the world. Whatever else it is, it is not a carry trade.

Nor is the base thin. Roughly 500,000 new investors entered through bank public offers and rights issues between 2024 and 2026, a great many of them opening a formal market account for the first time in their lives. The essay worries that this market serves a closed circle of asset managers and connected men. Half a million new retail accounts is the beginning of an answer to that worry, not evidence for it.

Where the Argument Goes Structurally Wrong

The most consequential omission is one of framing. The mirage thesis examines the trading screen — the secondary market — and quietly assumes it is the whole market. It is the smaller half. Over 24 months, the Nigerian capital market mobilised N4.65 trillion in fresh equity and brought 33 deposit money banks into compliance with the Central Bank’s new thresholds. That is not money circulating between speculators. It is new, permanent, loss-absorbing capital sitting on the balance sheets of the institutions that finance the economy.

And the causal direction runs opposite to what the critics assume. Better-capitalised banks carry higher single-obligor limits. Higher limits mean larger tickets for manufacturing, agro-processing, infrastructure and power. A bank cannot lend what it does not have. The recapitalisation was, in substance, a recapitalisation of Nigerian credit supply — the very thing the essay says is missing.

The market also priced that supply honestly. The banking index fell through mid-2024 as investors marked down dilution risk from anticipated rights issues, then recovered as capital was actually raised and stronger balance sheets reassessed. Decline on anticipated dilution, recovery on realised capital. That is textbook price discovery, and it is not what a rigged market does. A racket does not price dilution against itself.

The foreign capital numbers have moved too. Inflows into the banking sector rose 93.25 per cent year on year to $13.53 billion in 2025 — 58.26 per cent of Nigeria’s total foreign capital importation of $23.22 billion. International investors supplied over a quarter of recapitalisation capital. And equity subscribed into a bank’s capital base cannot be pulled out on a Tuesday afternoon. It can only be sold to somebody else, which changes the name on the register without removing a naira from the bank.

Nor did any of this arrive by luck. The Investments and Securities Act 2025 replaced a statute written in 2007, sharpened enforcement, criminalised Ponzi operations and brought digital assets inside the perimeter. Settlement is moving to T+1. S&P Dow Jones Indices has put Nigeria on its 2027 watchlist for possible upgrade from standalone to frontier status. Frontier managers, T. Rowe Price among them, have said publicly that they still see value after this year’s run.

Intellectual honesty requires the other entry in the ledger: FTSE Russell remains conspicuously cautious on Nigeria’s reclassification, citing repatriation reliability and market accessibility. That is a live constraint, not a footnote, and anyone selling this story without mentioning it is selling something.

Where the Critics Are Right

They are right that the All-Share Index feeds nobody. Right that market capitalisation is not welfare. Right that a share price can triple without a single hire. Right that greenfield direct investment remains far below what a country of 240 million requires. Right that power, logistics and the cost of credit to small enterprise are still binding. Right that too much of the market’s weight sits in financial services, and that genuine depth needs manufacturers and technology issuers listed beside the banks. And right, above all, that Nigerians experience this economy through rice, transport fare and rent — and that no index level has ever softened any of the three.

But several of the supporting numbers have been overtaken. Headline inflation, quoted at 21.88 per cent for July 2025, stood at 15.15 per cent by December 2025 after the CPI rebasing and has held broadly there since. The claim that GDP fell from over $400 billion to about $195 billion ignores the 2025 rebasing, which placed 2024 nominal GDP at N372.82 trillion — roughly $243.8 billion — with World Bank indicators putting 2025 near $290.8 billion. Real growth was 4.07 per cent year on year in the fourth quarter of 2025. And the 33.3 per cent unemployment figure everyone still quotes dates from the fourth quarter of 2022, under a methodology since retired.

The essay’s own method — check the claim against the number — is exactly the right one. It simply has to be applied to every claim, including the comfortable ones.

The Barometer

The stock market is a barometer, not the weather. It is a good metaphor and we should keep it. But when a barometer has been rebuilt, recalibrated and independently checked against 91 others, the sensible response is not to smash it for reporting a temperature you dislike. A balloon does not raise N4.65 trillion in permanent equity for 33  banks. A balloon does not survive conversion into dollars. And a balloon is not owned, to the tune of 89 per cent, by the people standing underneath it.

The hard work is untouched by any of this: power, roads, credit at rational rates, jobs that pay enough to live on. No capital market anywhere has ever delivered those by itself, and ours will not be the first. But a market that is mobilising trillions in domestic savings, and that global allocators now rank among the strongest performers in the world, is not the obstacle to that work. It is one of the few instruments we have that is currently doing its job.

* Adekunle, a capital markets analyst and commentator on financial regulation, writes from Abuja