A new report by TLP Advisory has revealed deep-rooted structural and regulatory barriers preventing Nigeria’s high-growth startups from listing on the Nigerian Exchange (NGX), despite efforts to attract tech companies through the launch of the NGX Technology Board in 2022.
The report, titled “Rethinking Funding & Exits: Nigeria’s Missing IPOs and the NGX,” warns that the absence of local listings poses a major threat to long-term sustainability and wealth creation in Africa’s largest startup ecosystem.
According to the findings, most founders lack adequate information about what it takes to go public.
A majority (53%) of surveyed founders say they are not sufficiently aware of the NGX listing process.
This knowledge gap is reinforced by current exit preferences, with nearly half (46%) indicating they would rather pursue acquisitions than initial public offerings. Only about one in five (21%) founders would consider an IPO, and many of them prefer foreign exchanges.
Currency mismatch
The report highlights a more fundamental structural issue, which is currency mismatch. According to the report, about 77% of funded Nigerian startups raise capital in US dollars but earn revenue in naira, creating a natural incentive to pursue offshore exits.
- Other concerns include compliance costs and fears of undervaluation (26%), as well as limited market liquidity (16%).
- Still, the report notes that appetite exists for local listings if reforms are enacted, with 42% of founders open to listing on the NGX and more than half expressing positive sentiment overall.
Speaking at the report’s launch during the Africa Prosperity Summit, hosted by Ventures Platform, Co-founder of TLP Advisory, Odunoluwa Longe, said the lack of listings is not due to a lack of ambition.
“Nigeria’s startups have proven they can build globally competitive businesses, but too much value still flows offshore because viable local exit routes are limited.
“The issue isn’t founder ambition or rejection of the NGX; it’s a disconnect propelled by information gaps, perceived illiquidity, and a currency mismatch that makes dollar-denominated exits more attractive,” she said.
The need for clarity
Longe added that aligning regulators, founders, investors, and policymakers is key to transforming the NGX into a platform that supports growth-stage innovation.
“With clarity, practical education and confidence-building, we can turn the NGX into a genuine platform for long-term wealth creation in Nigeria,” she said.
Also speaking, Founder and CEO of AltSchool Africa, Adewale Yusuf, echoed the need for better education and engagement.
“The NGX needs to actively engage founders and use them as channels to show what’s possible on the exchange,” he said.
“Many of us don’t fully understand the process or requirements. With clear structures and educational support, confidence in the local market will grow,” he added.
What you should know
In 2023, the Minister of Communications, Innovation, and Digital Economy, Dr. Bosun Tijani had announced plans to collaborate with Nigerian Exchange Limited (NGX) to stimulate startup listings with the then newly created NGX Technology Board.
Tijani, who stated this during a tech event themed; Invest in Africa’s Future- Let’s talk about exits- a joint initiative by the Ministry, NGX, and Future Africa in New York, on the sidelines of the United Nations General Assembly (UNGA) meeting, said this was part of the government’s efforts to diversify from oil.
- At the same event, the Chief Executive Officer of the NGX, Temi Popoola, stated that the Exchange would work assiduously to support the agenda of the Minister and the mandate of President Bola Tinubu.
- While stating that technology is a big enabler of the capital market, Popoola said that NGX was keen on fostering innovation in the capital market, potentially attracting a larger pool of investors and mature tech companies to list on its platform.
- However, two years after the promise by both officials, the result of the promised collaborations remains unseen.
