Brickstone Capital Flow Reports Jan-Feb, 2026 (Issue 01)

Brickstone Capital Flow Reports Jan-Feb, 2026 (Issue 01)

Overview

Nigeria opened 2026 with one of the most robust capital flow cycles across emerging markets, recording total inflows of $4.95bn in January and $4.62bn in February — a 60% year-on-year increase. While the headline numbers are impressive, the composition tells a more cautionary story: portfolio investment dominated overwhelmingly, accounting for over 95% of total inflows in both months.

Key Findings

Nigeria’s extraordinary yield differential — over 16 percentage points above the US 10-year Treasury — remained the dominant driver of inflows, attracting short-term foreign capital into T-Bills, OMO instruments, and bonds.

The money market segment alone absorbed approximately 50% of all inflows, making it the single largest component. FDI, by contrast, remained structurally weak at just 3.7% of total inflows (~$178mn/month), well below the 8–12% seen in peer Sub-Saharan markets.

On the positive side, the naira appreciated from NGN 1,552 to NGN 1,534 against the dollar, FX reserves grew to $42.8bn, and the FX Confidence Index reached its highest recorded level. The trade balance remained in surplus at over $2bn per month, supported by oil production recovery and early Dangote Refinery import substitution effects.

Macro Context

The CBN began a measured easing cycle with a 25bps MPR cut to 27.25% in February. Disinflation continued for a thirteenth consecutive month, reaching 24.5%. Globally, a mild uptick in the VIX and moderation in EM fund flows — linked to US trade tariff uncertainty — caused Nigeria’s EMBI spread to widen slightly from 362bps to 371bps, signalling manageable but real external sensitivity.

Outlook

Q2 2026 inflows are projected at $14–16bn for the quarter. Key catalysts include National Assembly passage of the Tax Reform Bills, CBN MPC easing decisions in March and May, Dangote Refinery ramp-up toward 650,000bpd, and oil production recovery toward 1.65mbpd. The principal downside risk remains a sharp US dollar rally or oil price decline below $70/bbl, which could trigger a rapid portfolio reversal and renewed FX pressure.

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