Nigeria’s equities market is projected to achieve a remarkable 32 percent surge in 2025, driven by corporate tax relief, improving foreign exchange conditions, and moderating inflation rates.
CardinalStone Research’s mid-year economic outlook attributes this bullish forecast to government-led reforms and macroeconomic adjustments that are easing operational pressures for businesses. The reduction of Corporate Income Tax from 30 percent to 25 percent, as outlined in recently signed tax legislation, represents a key catalyst for improved business profitability.
“The CIT reduction from 30 percent to 25 percent significantly benefits business profitability and supports higher dividend payments,” the research firm noted. Additional VAT exemptions on key inputs and transport services are expected to reduce production and distribution costs across multiple sectors.
Using the Grinold-Kroner model, CardinalStone estimates the market could achieve a 32.2 percent total return with a risk-adjusted return of 14.5 percent. The expected return-per-risk ratio of 1.82 times positions Nigerian equities ahead of comparable African markets on a risk-adjusted basis.
Broader economic indicators support this optimistic outlook. Real GDP growth is projected at 4.1 percent in 2025, exceeding the 3.4 percent recorded in 2024. Inflation is expected to moderate to 20 percent from last year’s 33 percent average, supported by exchange rate stability and declining energy costs.
Monetary policy adjustments are anticipated to further support market performance. Potential cuts to the monetary policy rate between 50 and 100 basis points in the second half of 2025 would reduce borrowing costs and enhance investor appetite for equities.
Foreign portfolio investment has shown remarkable recovery, with inflows reaching $8.05 billion in the first half of 2025, nearly matching the full-year 2024 total. “We expect this renewed momentum in foreign portfolio investment activities to continue, supported by Nigeria’s relatively strong macroeconomic narrative,” CardinalStone stated.
Sector-specific analysis reveals strong earnings prospects across upstream oil and gas, fast-moving consumer goods, banking, and telecommunications. SEPLAT and ARADEL emerged as top picks in the oil sector, while GTCO, Zenith Bank, and UBA were identified as fundamentally strong banking institutions.
The consumer goods sector is positioned for recovery following two years of elevated input costs. Exchange rate stability is expected to ease foreign exchange-related pressures that have constrained margins. Companies including Nestlé, Nigerian Breweries, Unilever, and UACN have made strategic investments in distribution networks and introduced competitively priced product variants.
Telecommunications operators are expected to benefit from recently approved tariff increases and renegotiated infrastructure contracts, helping restore margins after extended cost pressure periods.
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