Nigeria is in advanced talks with JP Morgan to regain entry into its Government Bond Index, a development that could signal renewed investor confidence in the country’s foreign exchange (FX) regime following sweeping reforms by the Central Bank of Nigeria (CBN).
This was disclosed by Patience Oniha, Director-General of the Debt Management Office (DMO), during an investor engagement session jointly organized by Nigeria’s Ministry of Finance and the CBN on the sidelines of the IMF/World Bank Spring Meetings in Washington, D.C.
Nigeria was removed from the JP Morgan index in 2015 after foreign investors interpreted changes to the country’s forex policies as a reversion to capital controls.
Why It Matters
Inclusion in JP Morgan’s Government Bond Index serves as a critical marker of global investor confidence and offers access to billions of dollars in passive investment flows. Rejoining the index would serve as a strong endorsement of recent efforts by the Nigerian government and CBN to liberalize and stabilize the FX market—an issue that led to Nigeria’s exclusion a decade ago.
What the DMO DG Is Saying
Responding to inquiries about Nigeria’s potential timeline for re-entry, Oniha confirmed that discussions with JP Morgan are progressing, largely thanks to the country’s recent FX reforms.
“With all the reforms that have taken place, particularly around FX, we have started engaging JP Morgan again to get back into the index. We think we are eligible now,” she said.
She acknowledged that Nigeria’s removal from the index was triggered by challenges including FX illiquidity and restrictions on investor repatriation. However, she noted that current reforms have significantly improved market transparency and functionality.
Conditions for Re-entry
Sources familiar with the discussions revealed that while negotiations are moving forward, key milestones must still be achieved before re-inclusion is finalized. A primary concern is the depth and liquidity of Nigeria’s local bond market, which needs to be robust and attractive to global investors.
Nevertheless, the sources expressed cautious optimism that if current progress is sustained, Nigeria could be reinstated before the end of the year.
Analysts estimate that re-entry could attract up to $2 billion in immediate portfolio inflows, as passive funds tracking the index adjust their holdings to reflect Nigeria’s re-inclusion.
Background: Why Nigeria Was Removed
Nigeria first joined the JP Morgan Government Bond Index in October 2012 after developing a more active domestic bond market, characterized by a two-way quote system, committed market makers, and a diversified investor base.
However, by January 2015, JP Morgan placed Nigeria on its Index Watch list due to three primary concerns:
- Illiquidity in the FX market – Investors struggled to repatriate capital.
- Lack of transparency – The exchange rate mechanism lacked clarity.
- Absence of a functional two-way FX market – Undermining investor confidence and market efficiency.
Nigeria was officially removed in September 2015 after failing to resolve these issues.
Further setbacks followed in 2022, when JP Morgan downgraded Nigeria from its “overweight” rating for emerging market sovereign debt. The downgrade was attributed to Nigeria’s failure to leverage high oil prices to strengthen its macroeconomic position, alongside concerns over declining FX reserves, fuel subsidies, and weak fiscal buffers.
In April 2025, JP Morgan advised investors to unwind long positions in Nigerian Open Market Operation (OMO) bills due to renewed global trade tensions and falling oil prices—factors that could heighten Nigeria’s fiscal vulnerabilities.
What Rejoining the Index Means for Nigeria
Re-entry into the JP Morgan index would enhance Nigeria’s credibility in global capital markets and potentially unlock billions in passive investment inflows. It would also validate ongoing efforts by the CBN to unify exchange rates, boost FX liquidity, and create a more transparent pricing framework.
Moreover, it could lower Nigeria’s borrowing costs and ease pressure on the naira by attracting foreign currency inflows—providing much-needed relief in a challenging economic environment.
