Brickstone Capital Flow Reports Jan-Mar, 2026 (Issue 02)

Overview

Q1 2026 — Baseline Scenario: Constructive with Heightening External Risks

Total capital inflows for Q2 2026 are projected at $14–16bn for the quarter (~$4.8–5.3bn/month), representing a 5–10% improvement over Q2 2025 levels. The yield differential remains the primary attractor. FX stability and continued disinflation provide supportive tailwinds. The principal downside scenario is a sharp US dollar rally or oil price decline below $70/bbl, which could trigger a risk-off-driven reversal of portfolio flows and FX pressure in the $150–200mn/day range.

Key Findings

Nigeria’s capital flow cycle completed a strong — albeit moderating — first quarter in 2026. Total capital inflows reached $13.75bn across January–March 2026, averaging $4.58bn per month. This represents a 55–58% year-on-year improvement compared to Q1 2025 levels and confirms Nigeria’s continued standing as one of the most attractive carry destinations in emerging markets. The yield differential versus US Treasuries remained the dominant attractor throughout the quarter, even as the CBN’s measured easing cycle progressively trimmed the rate advantage.

However, March 2026 introduced more complexity. A sharp escalation in US tariff announcements triggered a global risk-off episode, pushing the VIX to 18.4 — its highest level since Q4 2024 — and materially compressing emerging market fund flows from $24.1bn in February to $19.8bn in March. Nigeria’s EMBI sovereign spread widened to 392bps and Brent crude declined to $72.5/bbl, narrowing the trade surplus and moderating inflow volumes. Total capital inflows of $4.18bn in March, while still robust in absolute terms, represented a 9.5% month-on-month deceleration from February and a more pronounced step-down from January’s peak of $4.95bn.

The composition of flows remained structurally unchanged: portfolio investment dominated at 94.9% of Q1 total inflows — a persistent concentration in short-term, reversible capital that continues to represent the central vulnerability of Nigeria’s external financing framework. FDI edged upward to $532mn for the quarter (3.9% share), supported by a positive reform impulse including the National Assembly’s advancing consideration of the Tax Reform Bills and continued Dangote Refinery operationalisation. The NGN appreciated further to an average of NGN 1,509 in March, and FX reserves rose to $43.5bn — providing a meaningful buffer against external shocks.

Outlook

The January–March 2026 data confirms that Nigeria’s capital flow cycle remains positive, but the Q2 2026 outlook carries a more cautious tone than the baseline published in Issue 001. Three factors have shifted the Q2 scenario: (1) the global risk-off episode in March — driven by US tariff escalation — has proven more persistent than anticipated, with the VIX remaining elevated entering April; (2) Brent crude has softened to $72.5/bbl against a Q2 baseline assumption of $73–78/bbl; and (3) the CBN easing cycle, while measured, has begun to modestly compress the yield premium that anchors Nigeria’s portfolio inflow advantage. Against these headwinds, Nigeria’s macro-reform momentum, growing FX reserves ($43.5bn), a structural trade surplus, and the anticipated passage of the Tax Reform Bill provide significant counterbalancing support.

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