Key highlights
- Nigerian tech startups are encouraged to list on the NGX to have access to capital market funding.
- The listing is also expected to enhance transparency, good corporate governance and sustainability of the startup ecosystem in Nigeria.
- Plans by the NGX to launch a Technology Board are expected to give tech companies easy passage to getting listed on the bourse.
The consulting firm, PwC, has said that the Nigerian capital market will further bolster the success of Nigerian startups if they list on the Nigerian Exchange Limited (NGX).
Aside from the opportunity to raise funds from the market, PwC said the startups would also benefit from improved governance, transparency, talent retention, and long-term sustainability.
Disclosing this in its latest publication titled ‘Growing the Nigerian Technology Ecosystem through the Capital Market’, PwC said the current status of Nigerian startups as number 1 in Africa can be better improved if the tech companies are listed on the NGX.
On the other hand, PwC said the Nigerian bourse will also be towing the path of advancement by making it easy for more tech companies to get listed. According to the firm, the recent move by Nigerian Exchange Limited (NGX) to launch Technology Board, a specialized platform for technology-based companies to list and raise capital on the NGX, is a step in the right direction to attract tech startups.
Nigeria’s vibrant tech sector needs the capital market
Highlighting the outstanding growth that has been recorded in the Nigerian tech sectors over the years, PwC in the publication said:
- “Nigeria is one of the continent’s more established startup ecosystems, with firms like Interswitch dating as far back as 2002. The country has produced five out of seven unicorns in Africa: Interswitch, Flutterwave, Opay, Andela, and Esusu.
- “It is interesting to note that besides Andela, all other unicorns are in fintech. The fintech sub-sector has the biggest share of the number of Nigerian tech start-ups at 36%, with payments and consumer lending being the focus of almost half of the sub-sector.
- “Insufficient banking services (particularly in rural areas), a young population, increasing smartphone usage, and regulatory efforts to increase financial inclusion, created advantageous openings for fintechs. Fintechs have jumped at the chance to provide improved propositions across the value chain to address problems with affordable payments, quick loans, and flexible savings and investments, among others.”
It, however, noted that a holistic and inclusive approach must be adopted for the entire tech ecosystem.
- “Home to over 400 tech startups and ranked 61st out of 100 countries worldwide in the start-up ecosystem index, Nigeria also ranks number 1 in Africa in terms of venture capital investment destination, leading in both funding and number of equity rounds.
- “It accounted for 23% of all equity funding and 27% of the total deal count of US$1.2 billion raised in 202210, portraying the country as the preferred investment destination in Africa. Despite these impressive performances, the Nigerian capital market does not optimally reflect the activities of the sector,” PwC said.
The NGX technology board
PwC said the proposed creation of the technology board by the NGX is a laudable initiative that is expected to promote more listings from African technology companies and create an inclusive environment that would catalyze further economic advancements whilst deepening the Nigerian capital market.
Recall that in December 2022 the Securities and Exchange Commission (SEC) approved the NGX Rules for listing on the Technology Board (The Rules). The Rules aim to attract technology companies to the capital market with less stringent listing requirements (compared to other listings boards) and provide Issuers, sponsors, investors, and advisors with important information about admissions, listings standards, disclosure, and notification requirements for the Technology Board.
