Nigeria's equities market is positioned for stronger demand after the Central Bank of Nigeria lowered its benchmark monetary policy rate by 350 basis points to 23 percent, the second such reduction in 2026.
The decision, announced after the Monetary Policy Committee's 307th meeting, represents a significant loosening of monetary conditions. Analysts expect lower borrowing costs to prompt investors to rotate from fixed-income instruments into equities as yields on government securities decline.
On Tuesday, September 22, the Nigerian Exchange All-Share Index gained 0.18 percent to close at 250,614.66 points, while market capitalisation rose by N297.21 billion to N162.68 trillion. That lifted the year-to-date return to 61.05 percent. Trading breadth was positive, with 36 gainers against 26 decliners.
Chief Blakey Ijezie of Okwudili Ijezie & Co said the cut would likely increase equity transactions and push share prices higher as investors pursue better returns. He expects fixed-income yields to weaken, with transaction volumes falling as investors migrate to equities. "We are going to see a surge in the volume of transactions and an increase in equity prices. There will be more demand for equities than sellers, so prices will adjust upward," he said.
Ijezie described the 350-basis-point easing as significant and beneficial to the economy. He added that lower borrowing costs should support manufacturers and other businesses by reducing financing expenses, potentially translating into lower production costs and moderate prices.
Abiodun Ogunniyi of GTI Group said the move is positive for the real sector after years of elevated borrowing costs. Lower rates should improve access to credit and encourage businesses to borrow for production and expansion. He noted that financing costs have been among Nigeria's biggest challenges over the past three to four years.
Ogunniyi said consumer goods, industrial goods and oil and gas companies should benefit from lower financing costs, with the market beginning to price in those expectations. He observed that commercial banks have charged as much as 30 to 35 percent APR on some products and expects pricing reviews, though the pace will depend on competition.
