International index supplier FTSE Russell has added Nigeria to its Watch Listing for a potential reclassification from Unclassified to Frontier Market standing.
The transfer alerts renewed confidence within the nation’s means to repatriate overseas capital after years of overseas trade challenges.
The motion follows the discharge of FTSE Russell’s 2025 Annual Fairness Nation Classification Overview, which famous that FX queues and repatriation delays have largely been cleared since early 2025.
The choice comes two years after Nigeria was faraway from all FTSE world indices as a consequence of acute greenback shortages that left overseas buyers unable to exit the market.
FX reforms open path to reinstatement
In a observe seen by Nairametrics, FTSE stated the Watch Listing standing permits “in-depth engagement” with Nigerian authorities and market individuals forward of a possible reclassification.
“On account of the suggestions obtained from the FTSE Fairness Nation Classification Advisory Committee and the FTSE Russell Coverage Advisory Board, the FTSE Russell Index Governance Board accepted the addition of Nigeria to the FTSE Watch Listing for potential reclassification from Unclassified to Frontier market standing”, the report said.
The step displays suggestions from buyers who confirmed enhancements in overseas trade liquidity beneath the Central Bank of Nigeria’s (CBN) reform program.
“Following affirmation from market individuals that the earlier reported delays within the means to repatriate capital from Nigeria and related overseas trade queues that resulted in Nigeria being downgraded to Unclassified market standing from September 2023, have been cleared because the starting of 2025.
The inclusion means Nigeria is now beneath remark for a potential return to the FTSE Frontier Market Index, a transfer that might restore its visibility to world institutional buyers and appeal to a whole lot of tens of millions of {dollars} in passive inflows from funds benchmarked to FTSE indices.
Nevertheless, FTSE emphasised that reinstatement isn’t automated and that It should rely on continued FX stability, predictable repatriation timelines, and affirmation from buyers that reforms are sustainable.
In line with FTSE, the Watch Listing exists to “alert the broader market that in-depth engagement is happening with a market that’s being thought of for a reclassification change and gives a chance for buyers to share their expertise of working out there with the intention to plan for a possible classification change.”
Market high quality nonetheless uneven
Alongside the announcement, FTSE revealed its High quality of Markets (QoM) Overview for Nigeria, which supplied a blended evaluation of the capital market.
Whereas regulatory oversight and market transparency scored nicely, the overview highlighted persistent weaknesses in overseas trade entry, transaction prices, and derivatives improvement.
The FX market was rated “Not Met”, reflecting restricted greenback availability and broad spreads that also frustrate portfolio buyers.
Transaction prices had been additionally deemed uncompetitive, whereas short-selling, inventory lending, and derivatives buying and selling stay restricted or underdeveloped.
In distinction, the report praised the Securities and Trade Fee (SEC) and the Nigerian Trade Restricted (NGX) for sustaining energetic supervision and enhancing disclosure requirements.
Nigeria’s clearing and settlement methods, operated by the Central Securities Clearing System (CSCS), had been rated positively with a dependable T+3 settlement cycle and good custodian competitors.
Why it issues
Nigeria’s addition to the Watch Listing represents a possible reversal of its 2023 downgrade, when FTSE eliminated the nation solely from its indices following widespread investor complaints about FX illiquidity.
The downgrade pressured world passive funds to liquidate Nigerian holdings, triggering capital outflows and weakening overseas participation on the NGX. Returning to the Frontier Index would assist Nigeria regain publicity amongst frontier-market buyers and rebuild belief.
FTSE stated it will proceed to interact with Nigerian authorities and worldwide buyers to watch the progress of reforms. The result of this engagement will decide whether or not Nigeria is reclassified within the subsequent overview cycle.
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