Nigeria wants its tech champions to list at home. The prevailing view is simple: fix liquidity, and the IPOs will come.
But that framing misses a deeper issue. Even with more capital in the market, many venture-backed tech companies may still struggle to list locally, not because the market cannot absorb them, but because they are not structurally built for it.
The dominant assumption is that the main obstacle is liquidity: deepen the market, attract more institutional capital, and local listings will follow.
There is merit to that argument. Nigeria’s equity market remains relatively shallow, with limited institutional depth and trading activity still heavily influenced by retail participation.
But focusing on liquidity alone risks overlooking a more structural constraint. Discussions around whether companies like Flutterwave or Andela could eventually pursue local listings have largely centred on market depth and exit optionality.
An equally important question receives far less attention: are these companies structurally aligned with the governance expectations of public markets?
Corporate governance is often treated as a box to be checked at IPO. In reality, it is a system that shapes investor confidence long before listing, and one that cannot be fundamentally reworked at the point of entry into the public market.
Liquidity: A real but incomplete explanation
The liquidity argument is not misplaced. For any public offering to succeed, the market must be able to absorb a significant volume of shares without destabilising price discovery.
In Nigeria, this remains a challenge. Institutional investors, particularly pension funds, tend to be conservative in equity exposure, while retail investors dominate trading activity.
For large, venture-backed companies seeking meaningful capital raises, the concern is legitimate: Is there sufficient depth to support both the offering and post-listing trading?
Without adequate liquidity, IPOs risk under-subscription, price volatility increases, and early investors face constrained exit options.
This is particularly relevant for companies that have scaled through multiple funding rounds, where early backers may eventually seek structured exit opportunities.
However, liquidity is not purely a function of available capital. It is also a function of investor willingness to participate, and that willingness depends on confidence. Confidence, in turn, is largely driven by governance.
The limits of “fixing governance at IPO”
A common response is that governance concerns are overstated because listing requirements impose discipline. Companies must meet disclosure standards, adopt governance codes, and satisfy regulatory scrutiny before being admitted to the market. This is true, but only to a point.
IPO processes are primarily evaluative, not transformative. They assess whether a company meets minimum standards; they do not fundamentally reconstruct how it is governed.
By the time a company reaches this stage, its ownership structure is already defined, often with layered investor rights and preferences. Its board composition reflects years of investor influence, not necessarily independence. And its governance culture, including disclosure practices and internal accountability, is already embedded.
These elements are not easily unwound in the final stages of listing without significant cost or disruption. In practical terms, the IPO does not create governance quality; it exposes it.
The governance gap: Private capital vs public markets
The more fundamental issue is the mismatch between how venture-backed companies are governed and what public markets require.
In private markets, governance frameworks are designed to protect a small group of sophisticated investors operating in high-risk environments. This typically results in concentrated control rights, extensive investor veto mechanisms, controlled information flows, and boards dominated
by founders and early backers. These structures are efficient in a venture capital context and have underpinned the rapid growth of companies across Africa’s tech ecosystem.
Public markets operate on an entirely different logic. They depend on the protection of dispersed minority shareholders, independent oversight at the board level, consistent and transparent disclosure, and clear limits on insider control. Transitioning from one system to the other is not automatic, and it is not merely a compliance exercise. It requires a rebalancing of control, incentives, and accountability that many venture-backed companies are not structurally designed to undertake at the point of listing.
How governance shapes valuation and ultimately liquidity
Governance does not just influence perception; it directly affects pricing. In public markets, investors do not simply evaluate growth prospects.
They assess how much risk they bear relative to insiders, founders, early investors, and controlling shareholders. Where governance structures suggest imbalance, investors respond in predictable ways: they demand a discount, reduce position sizes, or avoid the offering altogether.
Companies with concentrated control structures, weak board independence, or opaque disclosure practices are more likely to face valuation haircuts at listing. In some cases, institutional investors may decline participation entirely, leaving a greater burden on retail demand, which is typically less stable and less capable of supporting large offerings.
The effect does not end at listing. Weak governance can limit analyst coverage, reduce institutional participation over time, and thin secondary market trading. In this sense, governance is not separate from liquidity it is one of its underlying drivers. Markets are liquid where investors are confident. Where confidence is weak, capital becomes cautious, and liquidity thins accordingly.
The Nigerian context: Governance risk is priced more aggressively
These dynamics are amplified in Nigeria. While the country has made progress in developing corporate governance frameworks, investor confidence is shaped as much by enforcement as by formal rules. In practice, enforcement has been uneven, and concerns around insider influence, related-party transactions, and disclosure quality remain part of the market’s lived experience.
As a result, investors tend to price governance risk more conservatively. For venture-backed tech companies, this creates a double challenge: they must transition from private-market governance structures that are not naturally aligned with public market expectations, and they must do so in an environment where investors are already cautious and less willing to rely on formal compliance alone.
The assumption that meeting listing requirements will be sufficient to unlock strong demand is optimistic. Investors are likely to look beyond formal compliance and interrogate the substance of governance, who controls the company, how decisions are made, and how minority interests are protected. Where those answers are unconvincing, participation and therefore liquidity will be constrained.
Rethinking the path to tech IPOs in Nigeria
If Nigerian tech companies are to successfully access public markets, governance must be treated as a strategic priority from the earliest stages of the company lifecycle, not retrofitted at the point of listing.
What that looks like in practice is a company that begins rebalancing board composition toward genuine independence well before IPO; that simplifies ownership and control structures rather than layering complexity on top of complexity; and that builds a culture of consistent, proactive disclosure rather than the selective information-sharing typical of private markets.
Consider what early alignment actually requires. It means investors and founders agreeing, years before any listing, on what post-IPO governance will look like, and structuring the company accordingly. It means regulators and market operators are strengthening enforcement credibility so that governance standards are seen to be upheld beyond the point of admission to the market. Liquidity improvements and governance reform are not competing priorities. One creates the conditions for the other.
Conclusion
The conversation around Nigerian tech IPOs has rightly focused on liquidity. But liquidity is, at its core, a function of trust.
Corporate governance is the mechanism through which that trust is built, or undermined. It cannot be engineered at the point of listing, nor can it be reduced to a compliance checklist. It is embedded in how companies are structured, controlled, and operated over time.
Until governance is treated as a value driver, not merely a regulatory hurdle. Nigerian tech companies may continue to find that the barriers to public listing run deeper than liquidity alone.
Jawondo Ibrahim, Esq., is a corporate and regulatory lawyer whose work focuses on private and public capital markets, corporate governance, and regulatory compliance. He is currently pursuing postgraduate studies in Financial Law and Policy at Nile University of Nigeria.
