• Financing, Insight

Nigeria’s Exit from the FATF Grey List

Nigeria’s Exit from the FATF Grey List

Financial Action Task Force (FATF) is the global standard-setting body created in 1989 by the G7 to fight money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction.

The Task Force researches how criminals and terrorists raise and move illicit funds, promotes international standards (the “FATF Recommendations”) and assesses countries’ implementation of those standards through peer reviews and follow-up.

With more than 200 countries and jurisdictions committed to apply its standards through its global network of regional bodies and partners such as the International Monetary Fund (IMF) and World Bank, the FATF acts as a watchdog: it monitors jurisdictions for strategic deficiencies in AML/CFT frameworks and can list them as “jurisdictions under increased monitoring” (“grey-list”) or “high‐risk jurisdictions” (“black-list”).

The Financial Action Task Force (FATF) formally announced Nigeria’s removal from its list of Jurisdictions under Increased Monitoring (commonly referred to as the “grey list”) during its Plenary session in Paris on October 24, 2025. This decision marks the successful and timely completion of a rigorous two-year reform process initiated after Nigeria’s inclusion on the list in February 2023. This decision means Nigeria is no longer subject to the enhanced scrutiny applied to countries with strategic deficiencies in anti-money-laundering (AML), counter-terrorist-financing (CFT) and proliferation-financing (CPF) regimes.

The FATF’s public statement specifies that Nigeria, along with Burkina Faso, Mozambique and South Africa, completed the required action plan and thus was removed from increased monitoring. Although Nigeria had faced previous FATF listings and monitoring processes in 2013.

Why it matters

Being on the grey list signalled that Nigeria had significant strategic deficiencies in its AML/CFT/CPF framework, weaknesses in regulation, supervision, inter-agency coordination, beneficial-ownership transparency and financial intelligence sharing.

Grey-listing carries practical implications such as increased due diligence by international banks, higher compliance costs, risk of correspondent-bank relationships being curtailed, and dampened investor confidence.

Being removed goes a long way to improve the country’s financial integrity and transaction credibility. This has a positive impact on the country’s ability to increase transactions around cross-border banking, trade finance, remittances and global capital flows.

Possible implications for the Nigerian economy

  • Improved investor confidence: For international investors, viewing Nigeria as a lower-risk jurisdiction from an AML/CFT perspective improves terms of finance.
  • Lower cost / improved access to global finance: Transaction costs (especially in banking, trade finance & remittances) could see a substantial reduction, while access to international capital markets could improve.
  • Boost for fintech and trade sectors: Nigeria’s growing fintech ecosystem and trade flows may benefit from smoother cross-border transactions and improved interoperability with global financial networks.
  • Enhanced macro-policy credibility: The delisting offers a reputational boost for Nigeria’s reform programme (monetary, fiscal and institutional). It may assist in stabilising the currency, attracting diaspora remittances, and reducing capital flight concerns.
  • Foreign Direct Investment (FDI) and Capital Access: The most significant long-term benefit of the delisting is the positive correlation between financial integrity and increase access to foreign capital. The impact extends particularly to institutional investors, such as global pension funds, sovereign wealth funds (SWFs), and large insurers. These entities often operate under strict mandates that explicitly restrict or prohibit investment in jurisdictions designated as high-risk by organizations like the FATF. The removal of the grey list status effectively unlocks access to vast pools of global long-term capital.

Key risks and caveats

Nigeria’s removal from the FATF grey list marks a significant milestone. Sustaining the achievement requires continuous reform and strong institutional enforcement of AML/CFT frameworks, as any policy relapse could quickly reverse the gains. The delisting only tackles one dimension of Nigeria’s risk profile; underlying macroeconomic challenges such as high inflation, foreign exchange instability, fiscal deficits, the large informal sector, and persistent security concerns continue to weigh on investor confidence and growth potential. Moreover, the measurable benefits of the FATF delisting will take some time to discern, as improved access to global finance and restored correspondent banking relationships depend on consistent policy credibility and gradual rebuilding of international trust.

Based on the timelines of similar countries, Nigeria’s next full FATF Mutual Evaluation is anticipated around 2028. The failure to embed current improvements and secure long-term sustainability could lead to an unfavourable assessment during that evaluation, thereby heightening the risk of re-listing and undermining recent progress.

Furthermore, a critical observation from the November 2024 follow-up report (FUR) highlights the existence of several technical gaps despite the overall success in demonstrating effectiveness. Specifically, several recommendations concerning crucial risk areas were still rated as Partially Compliant (PC), including

R. 12 Politically Exposed Persons (PEPs): Vulnerability exists in the framework for adequate monitoring and mitigation of risks associated with domestic and foreign PEPs.

R. 15 (New Technologies): The regulation of emerging financial products, particularly Virtual Asset Service Providers (VASPs) and related new technologies, remains underdeveloped.

R. 22 Designated Non-Financial Businesses and Professions (DNFBPs) Customer Due Diligence (CDD): Continued weaknesses are present in the full implementation and enforcement of Customer Due Diligence (CDD) requirements across the full spectrum of Designated Non-Financial Businesses and Professions.

Recommendations for stakeholders

  • Government / Regulators: The Central Bank of Nigeria (CBN), Economic and Financial Crimes Commission (EFCC), Nigerian Financial Intelligence Unit (NFIU) and Ministry of Finance should continue to strengthen beneficial-ownership registries, financial intelligence sharing, supervision of high-risk sectors (fintech, remittances, cross-border trade), and embed the reforms into institutional systems to ensure sustainability.
  • Banks & Fintech firms should use the improved standing to renegotiate correspondent banking access, expand international partnerships, enhance cross-border remittance/payment services, and scale trade-finance solutions, while maintaining strong AML/CFT compliance.
  • Investors should reassess Nigeria’s country-risk premium in light of the delisting. However, it is expected that investors would continue to evaluate macro-economic and governance risks.

Conclusion

Nigeria’s exit from the FATF grey list is a significant institutional and reputational milestone, signalling that the country has addressed key deficiencies in its AML/CFT framework. While this alone does not equate to total eradication, it is a critical step towards opening up a clearer path for improved access to global finance, stronger cross-border trade, fintech-powered remittances and enhanced investor confidence. The ultimate payoff will depend on sustained reform, improved macroeconomic policies, and regulatory oversight working together to rebuild the trust of the global financial system.

References

  1. FATF, Outcomes FATF Plenary, 22-24 October 2025. FATF
  2. https://www.fatf-gafi.org/en/publications/Mutualevaluations/fur-nigeria-2024.html
  3. FATF, Jurisdictions under Increased Monitoring – 24 October 2025. FATF
  4. “Nigeria’s removal from FATF grey list marks boost for financial credibility – CBN”, Premium Times, 26 October 2025. Premium Times Nigeria
  5. “What Nigeria’s delisting from the FATF Grey List means for the economy”, Daily Trust, 27 October 2025. Daily Trust
  6. “Nigeria’s exit from the FATF grey list: A major boost to President Tinubu’s economic and monetary reforms”, BusinessDay, 26 October 2025. Businessday NG
  7. “South Africa, Nigeria exit global financial crime watch list”, Reuters, 24 October 2025. Reuters
  8. “South Africa and Nigeria removed from money laundering ‘grey list’”, Financial Times, 24 October 2025. Financial Times
What do you think?
Subscribe
Notify of
guest
0 Comments
Newest
Oldest Most Voted
Inline Feedbacks
View all comments
Insights

More Related Articles

  • Report

December 2025 Inflation Report

Inflation eased to 15.15% in December 2025 following an adjustment by the NBS.

Nigeria’s headline inflation moderated to 15.15% year-on year in December 2025, down from 17.33% in November, reflecting a methodological adjustment by the National Bureau of Statistics (NBS). 

The decline follows the NBS’s adoption of a 12-month average CPI for 2024 as the reference period, replacing the previous single-month (December 2024) base. This change was implemented to eliminate an artificial inflation spike caused by base effects. Under the former methodology, headline inflation for December 2025 was projected to surge to about 31.2%, a distortion driven by the comparison base rather than a sharp acceleration in underlying price pressures. The revised approach, therefore, provides a more accurate representation of inflation dynamics, even as price levels remain elevated. 

On a disaggregated basis, food inflation eased to 10.84% in December from 14.21% in November, while core inflation moderated to 18.63% from 20.59%, reflecting a broad based slowdown in price momentum following the methodological adjustment. On a month-on-month basis, headline inflation decelerated to 0.54%, down from 1.22% in the prior month. Food inflation turned negative at 0.36%, compared with 1.13% in November, suggesting easing short-term price pressures, while core inflation slowed to 0.58% from 1.28% previously.

OUTLOOK

We expect headline inflation to maintain a downward trajectory in 2026, supported by a relatively stable exchange rate, which should help moderate imported inflation pressures. Additionally, a weaker global oil market, driven by a projected supply surplus, could further ease global energy prices. However, this presents a double-edged risk: while lower energy prices may reduce domestic fuel costs and ease transportation and logistics expenses, weaker oil prices could also dampen export earnings and exert pressure on the naira, potentially offsetting gains through higher import costs.

On balance, the anticipated disinflation trend may create room for the Monetary Policy Committee to begin a gradual pivot away from its current hawkish stance, should macroeconomic conditions remain supportive.

Y-o-Y Inflation Trend New CPI Series
Y-o-Y Inflation Trend Old CPI Series
M-O-M Inflation Trend New CPI Series
Download report
  • Report

Nigeria Economic Review

2025 Economic Review

Economic Growth Performance

  • Nigeria’s economy expanded by 3.98% y/y in Q3 2025, easing from 4.23% in Q2, its strongest growth since Q2 2021, but outperforming the 3.86% growth recorded in Q3 2024.
  • The non-oil sector, which accounted for 96.6% of total output, grew by 3.91% vs Q2: 3.64%, supported by stronger activity in agriculture (3.79%), financial and insurance services (19.63%), trade (1.98%), construction (5.57%), and modest gains across ICT, real estate, and manufacturing.
  • In contrast, the oil sector grew by 5.84% y/y, a sharp slowdown from 20.46% in the previous quarter, reflecting weaker crude output. Oil production averaged 1.64 mbpd in Q3, slightly below Q2’s 1.68 mbpd but above the 1.47 mbpd recorded in Q3 2024.

Source: NBS, BRB Research

Inflation and Monetary Policy
  • Nigeria’s inflation environment has continued to improve, with headline inflation easing for the eighth consecutive month and settling at 14.45% from 16.05% year-on-year in November 2025. The deceleration has been driven largely by the rebasing effect, softer food price pressures, improved supply conditions, and a more stable foreign-exchange market. Core inflation remains elevated at 18.04% while Food inflation moderated to 11.08%, reflecting a gradual easing in underlying price pressures.
  • Against this backdrop, the Central Bank of Nigeria maintained the MPR at 27% in November 2025, following a 50-bps reduction in September, as it sought to consolidate recent progress on disinflation. Although headline inflation continued to moderate, the MPC noted that underlying price pressures remain elevated, warranting a cautious pause. The adjustment of the policy corridor to +50/-450 bps from +250/-250 bps signals a subtly more accommodative liquidity framework. The stance shows a gradual shift from aggressive tightening toward a more balanced macro-stabilization

Source: NBS, BRB Research                                                Source: Investing.com, BRB Research

Exchange Rate and Foreign Reserves
  • Nigeria’s foreign exchange market stabilized in 2025 following previous periods of sharp depreciation, supported by CBN initiatives including the Electronic FX Matching System (EFEMS), transparent auction processes, and partial market liberalization. These measures enhanced liquidity and narrowed the gap between official and parallel market rates, with the naira strengthening to ₦1,446 per US dollar by November 2025 from ₦1,535 per US dollar at the end of 2024. 
  • Foreign reserves rose from USD 40.2 billion at the end of 2024 to USD 44.67 billion by November 2025, reflecting strengthened external sector conditions. The recent Eurobond issuance of $2.35 billion provided a significant boost to reserve buffers, complementing gains from improved oil production, firmer export receipts, steady remittance inflows, and renewed foreign portfolio investment.
Oil Market
  • The 2025 oil market began the year in relative balance, with temporary supply disruptions from seasonal factors and unplanned non-OPEC+ outages offset by robust structural supply. Demand growth remained moderate amid macroeconomic uncertainty, resulting in stable prices with limited volatility. 
  • In Q2, OPEC+ began rolling back voluntary production cuts while output from the U.S. and Brazil remained strong, leading to rising supply that outpaced demand and triggered bearish sentiment. By Q3, oversupply became the defining feature, as global production exceeded demand, inventories accumulated, and analysts revised downward full-year price expectations.
  • The year closed with the supply glut persisting into Q4; inventories remained elevated, and prices stabilized below mid-year peaks following OPEC+ guidance on potential early-2026 output pauses.
Oil Production
  • In Q3 2025, Nigeria’s average daily oil production stood at 1.64 million barrels, up 0.17 mbpd from Q3 2024 but slightly below Q2 2025’s 1.68 mbpd. The sector’s gradual recovery in 2025 was supported by improved security, enhanced pipeline integrity, and more coordinated upstream operations. Production averaged 1.66 mbpd in H1, peaked at 1.68 mbpd in Q2, the highest since 2020, and moderated slightly in Q3, reflecting ongoing operational adjustments and maintenance activities. 
  • The rebound helped reinforce external balances and foreign-exchange supply, but output volatility remained a feature of the sector’s performance. Despite the improvement, production levels fell short of the government’s 2025 target of 2.06 million barrels per day, reflecting ongoing structural challenges. Crude theft, infrastructure constraints, and intermittent operational disruptions continued to weigh on capacity utilization, limiting the pace of recovery.

Source: NBS, BRB Research 

Economic Outlook for year 2026

2026 Outlook
  • Nigeria’s economy is expected to expand over the near term, with the IMF projecting GDP growth of 3.9% in 2025 and 4.2% in 2026, supported by stable oil inflows, improving oil production levels, and greater policy consistency. 
  • Headline inflation is expected to continue its moderating trend in 2026, easing toward 11.56% by year-end, supported by a stable exchange rate, cautious monetary policy, and weaker energy prices. This disinflationary environment is likely to provide the Central Bank of Nigeria with scope to maintain a neutral to mildly accommodative monetary policy stance. We anticipate a potential recalibration of the MPR, with a projected easing of around 200 basis points by mid-2026, contingent on inflation remaining firmly anchored and underlying price pressures remaining subdued.
  • Several risks could reverse the projected downward trend in inflation in 2026. Pressure on the exchange rate may increase the cost of imported goods, while elevated government spending ahead of elections could inject additional liquidity, boosting prices. Structural challenges, including insecurity in key food-producing regions, may constrain supply and exert upward pressure on food prices. External shocks, such as volatility in global oil markets, also represent a potential upside risk to inflation during the year. 
  • Despite these challenges, higher foreign reserve buffers and reforms in the foreign-exchange market, including enhanced transparency and more efficient EFEMS operations,  should help limit exchange-rate volatility and strengthen overall broader macroeconomic stability. These developments, alongside easing inflation and relatively stable macro fundamentals, are likely to support investor sentiment and attract modest portfolio inflows over the course of the year.
  • The macroeconomic environment nonetheless remains sensitive to external and domestic shocks. Oil-price volatility continues to pose the most significant risk to fiscal stability and FX supply, while uncertainty around the revised Capital Gains Tax framework and lingering security concerns may temper investor appetite in the near term. Even so, the broader environment suggests cautiously improving conditions for Nigeria’s asset management and investment industry in 2026.
  • Global oil market dynamics will be pivotal for Nigeria in 2026, with a structural supply surplus expected to persist due to strong non-OPEC+ production from the U.S. and Brazil and a measured supply approach from OPEC+. Demand growth will remain concentrated in non-OECD Asia, while elevated inventories are likely to keep Brent crude in the mid-to-low $50s per barrel. A potential peace deal between Russia and Ukraine could further soften prices if sanctions on Russian oil are eased, adding additional barrels to the market. Although geopolitical disruptions could still trigger short-term volatility, sustained low prices may eventually dampen non-OPEC+ investment. 

Equities Market Review

Nigeria Equities Market Performance 2025

The Nigerian equity market delivered a powerful yet volatile performance in 2025, emerging as one of the strongest markets globally. For most of the year, sentiment was supported by market-friendly reforms, resilient corporate earnings, improved foreign-exchange conditions and strong domestic liquidity.

Market capitalization rose from ₦62.76 trillion at end-2024 to ₦91.29 trillion by late November, reflecting a 45.45% increase in investor wealth. Gains strengthened through the third quarter, with the ASI up 16.57% by mid-year and nearly 50% by October. The NGX All-Share Index (ASI) also advanced significantly, climbing from 102,926.40 points to over 150,000 points in October before moderating to 143,520.52 in November.

Investor participation was robust, driven by both domestic and foreign flows. Total transactions for the first eight months of the year rose by 99% to ₦6.92 trillion. Foreign portfolio inflows increased by 122% to ₦1.45 trillion, aided by improved FX liquidity and clearer exit conditions, whereas domestic investors contributed over ₦5.46 trillion, reinforcing their leadership in market activity. These flows were complemented by the performance of several high-growth stocks, with tickers like BetaGlass, MTN, Ellah Lakes, WEMA Bank, NCR, MBENEFIT, UACN, and ASO Savings delivering returns ranging between 100% and more than 500%, reflecting strong liquidity and high conviction in select counters.

NGX ASI Monthly Returns

Sector performance highlighted the breadth of the rally. Consumer goods companies led with over 100% year-to-date gains by October, supported by strong local production and pricing resilience amid FX constraints. The Insurance Index rose sharply on recapitalization expectations, while the Banking Index, though third in returns, remained the most actively traded, reflecting strong institutional interest. Industrial goods stocks also saw significant demand, whereas the Oil & Gas Index lagged for most of the year due to sector-specific challenges.

NGX Sectoral Performance (2023-2025)

However, the positive momentum was interrupted in November by the sharpest correction of the year. Market capitalization fell by about ₦6.54 trillion following uncertainty over the proposed changes to the Capital Gains Tax framework. The shift from a flat 10% rate to a progressive structure of up to 30% triggered aggressive profit-taking and capital repatriation by foreign investors. Combined with geopolitical concerns, the policy announcement dampened sentiment and illustrated how quickly fiscal decisions can offset months of progress driven by monetary reforms and FX stability.

2026 Outlook

Outlook

Building on a robust 2025, Nigeria’s equities market is poised for a strong 2026 performance, with potential total returns exceeding 30%, supported by ongoing reforms, macroeconomic stability, and stronger corporate earnings. Key growth drivers include continued sectoral diversification, with consumer goods, industrials, and financials expected to anchor performance, alongside rising dividends that enhance total shareholder returns.

Market sentiment will be increasingly shaped by company-specific fundamentals, with investors focusing on earnings quality, balance sheet strength, and cash-flow resilience. The anticipated listing of NNPC Limited and Dangote Refinery next year could serve as a major liquidity and valuation catalyst, attracting both domestic and foreign capital.

Further support is expected from positive macroeconomic factors, including easing inflation, stable interest rates, and an improved foreign-exchange environment, as well as regulatory clarity that strengthens investor confidence. Active portfolio management, diversification across high-quality sectors, and close monitoring of earnings, FX developments, and policy changes will remain essential to navigate potential volatility and capture upside opportunities.

Download report
  • Report

November 2025 Inflation Report

Inflation eased to 14.45% in November

Nigeria’s headline inflation rate eased to 14.45% year-on year in November 2025, down from 16.05% in October, marking the eighth consecutive month of disinflation and coming in below the Federal Government’s 2025 inflation target of 15.75%. The moderation was driven by a slowdown in both major components of inflation. Food inflation declined to 11.08% from 13.12%, while core inflation eased to 18.04% from 18.69%, reflecting softer price pressures across key non-food categories.

However, price pressures persisted on a month-on-month basis, with headline inflation rising to 1.22%, compared with 0.93% in October, indicating continued increases in price levels. The acceleration was largely food-driven, as food inflation rebounded to 1.13% from -0.37%, reversing the disinflation observed in the previous two months. This reflects renewed pressure from seasonal demand ahead of the festive period, alongside security-related disruptions in key food-producing regions that have constrained harvest activities.

In contrast, core inflation moderated to 1.28% from 1.42%, supported by slower price increases in financial services (0.18% vs 1.71%), education (0.02% vs 0.78%), and information and communication (0.12% vs 0.54%).

OUTLOOK

Looking ahead to November, we expect headline inflation to tick up in December 2025, driven by festive-related demand pressures and food supply constraints, with the increase amplified by base effects following the CPI rebasing. 

Beyond this temporary rise, we anticipate the disinflation trend to resume from early 2026, potentially creating room for the Monetary Policy Committee to begin a gradual pivot
away from its current hawkish stance.

Y-o-Y Inflation Trend
M-O-M Inflation Trend
Download report