Naira Mutual Funds Soar 140% Amid Shift Toward Local Currency Investments
Naira-denominated mutual funds have recorded a sharp surge of about 140% over the past year, as investors increasingly pivot toward local currency assets in what analysts describe as a growing vote of confidence in Nigeria’s domestic financial market.
Data shows that while dollar-denominated mutual funds posted moderate growth of 12%—rising from ₦1,708 billion in 2024 to ₦1,920 billion by November 2025—naira-denominated funds expanded significantly from ₦2,289 billion to ₦5,480 billion within the same period.
The development was highlighted in KPMG’s 2025 Banking Industry Customer Experience Survey Report titled “Competing for the Customer – Beyond the Basics in an AI-Shaped Financial Landscape.”
The report links the shift to improving confidence in naira-based assets, supported by relative currency stability and improving macroeconomic indicators.
According to the survey, steady economic growth—recorded at 3.13 percent in the first quarter and 4.23 percent in the second quarter—has begun influencing household financial decisions and savings behaviour.
Savings culture also appears to be strengthening. Only eight percent of respondents said they do not save from their income, compared to 18 percent recorded a year earlier.
Meanwhile, about half of households now save between five and 20 percent of their monthly earnings, suggesting a gradual return to financial discipline despite ongoing cost-of-living pressures.
Generational data shows varied but improving financial habits. Among Gen Z respondents, 68 percent save at least five percent of their income, reflecting rising financial awareness and strong adoption of digital financial tools.
Among millennials, 25 percent save between 11 and 20 percent of income, while 19 percent save between 21 and 40 percent. For Gen X respondents, 21 percent save between 21 and 40 percent, with a stronger focus on long-term financial security.
The survey notes that these patterns present opportunities for financial institutions to design targeted savings and investment solutions aligned with income levels, life stages, and digital preferences.
Despite the improving outlook, investment behaviour remains cautious. Many households continue to favour relatively low-capital assets perceived as stable safeguards against uncertainty.
Gold emerged as a preferred investment for 18 percent of respondents, while fixed deposits, mutual funds, and equities remain core components of most investment portfolios. In terms of income allocation, 22 percent of respondents invest between five and 10 percent of earnings, while 17 percent invest between 11 and 20 percent.
KPMG emphasised that trust, financial education, and advisory services remain critical drivers of investment participation. The report noted that consumers are more willing to invest when they feel adequately informed and confident in financial institutions.
Analysts say Nigeria’s financial system is gradually transitioning from resilience-driven survival to reform-driven stability. Ongoing banking sector recapitalisation efforts are helping close capital gaps and strengthen institutional trust through improved governance frameworks.
At the same time, regulatory reforms—including foreign exchange liberalisation, expansion of digital finance frameworks, and stricter corporate governance rules—are creating a foundation for sustainable long-term growth.
Customer confidence in formal banking channels is also strengthening, with eight in 10 respondents now saving through regulated financial institutions. This trend reinforces the central role of banks in shaping household financial behaviour and supporting broader economic stability.
Looking ahead, KPMG projects that leadership in customer experience within the banking sector will be determined less by premium product offerings and more by relevance, affordability, empathy, and accessibility at scale.
Financial institutions that align product design with real household pressures, simplify access to services, deploy technology effectively, and respond quickly to customer needs are expected to build stronger trust and support Nigeria’s economic growth trajectory.