Nigeria’s Economy gains Global attention as CBN Reforms Pay Off

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Michael McGaughy, founder of the Research Alpha fund and a veteran Asia-Pacific investor, has praised the Central Bank of Nigeria’s reforms, saying they have boosted the country’s profile as a global investment hotspot. The fund, which has generated a +130% return since inception, has been invested in Nigerian equities since 2017.

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“Reforms put in place by the Central Bank of Nigeria and others, such as the harmonisation of the foreign exchange market and the subsidy removal, boost Nigeria’s profile as a global investment hotspot,” McGaughy said in an interview. He noted that the launch of the Dangote refinery has helped to curb the use of foreign exchange to import refined products.

The International Monetary Fund (IMF) has also commended Nigeria’s authorities for implementing major reforms that have improved macroeconomic stability and enhanced resilience. The IMF noted that the results of the move have been transformative, with gross and net international reserves increasing in 2024, a strong current account surplus, and improved portfolio inflows

“Reforms to the FX market and foreign exchange interventions have brought stability to the naira,” the IMF said. The foreign exchange premium has fallen from over 60% to below 3%, and external reserves climbed to a peak of $40.9 billion at the end of 2024.

McGaughy believes that the Nigerian equity market has responded positively to the reform agenda, with corporate fundamentals improving as firms regain pricing power. He noted that Nigerian equities continue to offer compelling valuations, with most companies trading below 10x earnings.

“While Nigeria currently has better value than any Asian market, Sri Lanka and Pakistan both look attractive,” McGaughy said. He emphasized the importance of patient capital in emerging market investing, stating that his fund holds investments for a long time, reinvests dividends, and lets compounding do its magic.

The CBN Governor, Olayemi Cardoso, has also praised the IMF’s assessment, saying it affirms that Nigeria is regaining credibility and laying the foundation for inclusive, long-term growth.

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