Key questions this article answers:
  1. Several events in recent weeks have signalled an FX shortage despite the CBN’s FX reforms. How can the FG attract foreign currency to clear the country’s existing FX backlog? 
  2. What five key actions must the federal government prioritise to improve foreign investment in the country?


As of September 12, the NGX All Share Index (NGXASI) contracted by 2%, following an 8% decline in banking stocks at the beginning of the week. This development appeared to be an offshoot of the FTSE Russell index’s reclassification of Nigeria’s equity country classification to unclassified from frontier markets. However, the NGXASI's contractions were due to the CBN’s circular to banks, urging them to be prudent following booster gains from the foreign exchange (FX) reform policies. 

FTSE Russell reclassification, meant to signal investors about the safety of investing in Nigerian equity stocks, was primarily due to the country’s backlog of foreign exchange repatriation, as some delays take as long as 24 months. However, the reclassification’s impact on the NGX, with only 8.6% foreign participation (as of July 2023), is most likely muted. 

Rather, the CBN circular, issued on September 11, 2023, advising banks to treat the FX revaluation gains as