The Nigerian Exchange Group (NGX) is positive that regulatory changes will incentivise homegrown tech startups to list on its specialised technology board this year. Africa’s second-biggest exchange is already speaking to startups looking to access local capital as venture funding declines globally. 

“There are a couple of startups that are considering listing,” Jude Chiemeka, acting CEO of the NGX, told TechCabal over a call. “We are hopeful to see one or two listings this year.” 

The NGX has held a series of engagements with the tech ecosystem to explain the benefits of being publicly listed. At a gathering of founders and venture capitalists in New York last September, Temi Popoola, the NGX GMD/CEO designate, tried to woo Olugbenga Agboola, CEO of Flutterwave, Africa’s biggest payments startup. Flutterwave is considering an Initial Public Offering (IPO) on the New York Stock Exchange.

For the NGX, getting Nigerian startups listed has been a work in progress. In December 2022, Nigeria’s Securities and Exchange Commission (SEC) approved the rules for listing on the NGX tech board. The rules broken into two—Start-Up Tech and Big Tech segments based on market capitalisation—expect interested startups to meet corporate governance requirements, including registering as a public company and having shareholders and core investors with a track record. Yet a little over a year since the rules were introduced, no startup has been listed on Nigeria’s stock exchange.

Most Nigerian startups haven’t caught up with the high level of corporate governance required to go public, Chiemeka noted. “The SEC is trying to ensure that investors are protected. While some of them [startups] have been raising capital from VCs, to access public capital requires a lot more discipline.”

Iyinoluwa Aboyeji, founder of Future Africa, a Lagos-based VC firm, believes that listing on the NGX tech board “is a far more realistic exit strategy for startups” rather than waiting for secondary exits from global investors. “Companies who want to return capital should begin to align themselves with an exit on the local exchange,” he told TechCabal.

While the Nigerian capital market has had a bull run in the last three years, with two of the hottest stocks last year being legacy tech companies—Chams Plc. and Computer Warehouse Group Plc.—it will take much more convincing to get startups listed. The volatility of the naira could be an issue. 

“There is a problem with the amount of liquidity available [on the NGX],” said Jude Dike, CEO GetEquity, a marketplace that helps startup founders raise venture funding from retail investors. “A startup that is trying to exit will be looking anywhere from $10 million, which is somewhere around 10 billion naira. How can we guarantee that such liquidity exists on the NGX?”

Since Nigerian startups typically raise funds from foreign VCs and report their revenue in US dollars, listing on the Nigerian bourse might not be an option. For VCs, exits are how they justify the capital they raise from their funders. As one of TechCabal’s senior reporters, Abraham Augustine, argued in this piece, “Putting an African company—especially a company funded by American and European venture dollars—on an African stock exchange is a hard sell.”