Nigerian tech startups are staying away from listing on the Nigerian Exchange, with more than two-thirds citing currency and foreign exchange mismatch as the primary reason, according to a new survey by TLP Advisory published today.
The Currency Challenge
While the naira has risen almost 10% in the past six months, the currency has lost more than 65% of its value since President Bola Tinubu took office in 2023 and allowed it to trade more freely. This creates a fundamental problem: 77% of funded startups raise capital in dollars but earn revenue in naira, creating a strong incentive for offshore exits.
Three Years, Zero Listings
Despite the Nigerian Exchange launching its Technology Board in 2022 with relaxed requirements—including no minimum profit benchmarks and lower free-float requirements—there have been no tech listings to date.
Key Findings from the Survey
The report “Rethinking Funding & Exits: Nigeria’s Missing IPOs and the NGX” reveals several critical barriers:
Lack of Awareness: 53% of founders who haven’t considered an NGX listing simply don’t understand how local listings work or why they should pursue them.
Exit Preferences: Nearly half (46%) favor acquisitions compared with about one in five (21%) who would consider an IPO, many of whom aspire to list on foreign exchanges.
Market Concerns: 26% point to compliance costs and potential undervaluation, while 16% highlight limited market liquidity as a key concern.
A Glimmer of Hope
Despite the challenges, around two in five (42%) are open to an NGX listing if the right reforms are in place, with more than half expressing positive sentiment overall. The report recommends dual-listing partnerships with exchanges like NASDAQ or the London Stock Exchange to address the dollar dependency issue.
