The US Federal Reserve has lowered interest rates by 25 basis points. This move reduces the return on very safe assets in America and can push global investors to look for better yields elsewhere. 

Nigeria is one of the markets they will study closely.

Why the cut matters

When US rates fall, the cost of money falls too. Many big funds then move part of their cash from developed markets into places where returns are higher. 

Nigeria offers higher dividend yields in many blue-chip names and strong earnings stories in banks, cement, energy, consumer goods, and telecoms. 

If Nigeria can keep price stability and a steady foreign exchange market, the country could receive more foreign portfolio investment over the coming months.

Nigeria’s recent market story

In 2024, the Nigerian market did very well. The NGX All-Share Index rose strongly, and many companies beat inflation, giving investors real gains. 

The positive trend continued through mid-September 2025, with the index still up year to date and dozens of stocks staying ahead of inflation. This performance makes Nigeria stand out when global investors screen for returns after the US rate cut.

Are foreign investors returning?

Foreign participation improved in 2025 compared to 2024, though domestic investors still drive most activity. Inflows from abroad are stronger this year, even if net flows are not yet positive. 

If US rates keep easing and Nigeria maintains stability, the balance could flip to net inflows by year-end. That would support prices and deepen liquidity.

Where the money may go

Banks are likely to be first in line. They are liquid, widely followed, and sensitive to better funding costs and improving consumer demand. Energy names with foreign currency earnings also look attractive because they help reduce currency risk for foreign investors. 

Cement leaders should benefit from steady infrastructure demand and strong balance sheets. In consumer goods, easing inflation can support volumes and margins. Telecoms remain long-term leaders in Nigeria’s digital economy, though investors will watch market liquidity closely.

What helps the case for Nigeria

Three things support fresh inflows. First, performance: the market has delivered strong returns and many companies still trade at reasonable valuations. 

Second, depth: large, well-run companies allow big orders to enter and exit without moving prices too much. Third, reform: steps to make the foreign exchange market clearer have improved confidence, while ongoing bank capital raises strengthen the system.

What can spoil the story

Currency risk remains the biggest concern. If the naira weakens sharply, dollar returns can fall even when share prices rise. Policy surprises also worry investors. 

New taxes, sudden rules, or delays in repatriating funds can cause foreign money to pause or leave. Global conditions matter too. If US inflation rises again and Treasury yields jump, funds could rotate back to the US.

A simple approach for investors (not financial advice)

Nigerian investors can stick with quality names and spread exposure across banks, cement, energy, consumer, and telecoms. Focus on companies with steady cash flow, clear governance, and a history of paying dividends. 

Think in real terms: aim to beat inflation through a mix of earnings growth and payouts.

Foreign investors should manage currency risk and favour companies with foreign currency revenues or natural hedges. 

Use liquid large caps for easier entry and exit, and confirm repatriation timelines with brokers and banks. Keep an eye on three gauges: the US 10-year yield, Nigeria’s monthly inflation print, and the NGX foreign inflow/outflow report.