The cheerful narrative about Nigeria markets creating lasting prosperity through stock investment conveniently ignores what the numbers actually reveal. While the Nigerian Exchange Limited hit N99.376 trillion in market capitalization—a stunning 51.19% annual return—this rally depends entirely on Central Bank of Nigeria forex reforms and banking recapitalization programs pumping over N2 trillion into the system.

Policy-Dependent Growth Creates Fragile Foundations

Strip away the regulatory steroids, and you find a market propped up by government intervention rather than organic economic strength. The CBN's banking sector recapitalization exercise and proposed tax reforms on company profits created artificial tailwinds that mask underlying structural problems. Domestic investors drove 72.92% of the N3 trillion trading turnover, but this reflects limited foreign confidence rather than local sophistication. The oil and gas sector's 1.54% decline signals that Nigeria's core economic engine remains broken despite financial engineering elsewhere. This suggests the rally represents capital flight from productive sectors into speculative plays rather than genuine wealth creation.

Insurance Sector Surge Reveals Regulatory Arbitrage Game

The Nigerian Insurance Industry Reform Act triggered massive gains—Sovereign Trust Insurance up 241.07%, AIICO Insurance rising 165.03%—but these moves represent regulatory arbitrage, not fundamental value creation. Smart money positioned ahead of policy changes while retail investors chase momentum. The risk is that households following this "stock investment for prosperity" advice are buying at cycle peaks driven by temporary policy support. Exchange rate stability remains the critical variable, and the market's dependence on CBN forex reforms creates vulnerability to future currency pressures and rising insecurity constraints.

Expect this policy-driven rally to reverse when regulatory support fades. Nigerian households betting their escape from poverty on these inflated valuations may find themselves poorer than when they started.