A recent study from TLP Advisory has highlighted fundamental structural, financial, and regulatory challenges that are hindering Nigeria...
A recent study from TLP Advisory has highlighted fundamental structural, financial, and regulatory challenges that are hindering Nigeria's rapidly expanding startups from going public on the Nigerian Exchange (NGX), even after reforms implemented via the NGX Technology Board in 2022.
The report titled “Rethinking Funding & Exits: Nigeria’s Missing IPOs and the NGX” highlights that the lack of local listings poses a risk to long-term viability, wealth generation, and investor trust within Africa's biggest startup environment.
As per the research, entrepreneurs are still not well-versed in the process of going public. Over half of the participants (53%) state they lack adequate knowledge of NGX regulations. This gap in understanding also influences their current exit choices: almost half (46 percent) of the founders surveyed opt for acquisitions, whereas only 21% are open to an IPO — and many of these prefer overseas markets.
One of the most significant deterrents, as mentioned in the report, is currency mismatch. Approximately 77 percent of funded Nigerian startups secure funding in US dollars but generate income in naira, which naturally encourages them to pursue offshore exits that align more closely with their financial setup.
Additional issues highlighted by the founders involve significant compliance expenses and worries about being undervalued (26 percent), along with restricted market liquidity on the NGX (16%).
However, TLP Advisory notes that there is still interest in local listings when circumstances improve. Approximately 42 percent of founders indicate they would consider listing on the NGX if appropriate reforms are implemented, and over half show generally favorable opinions about the exchange.
At the report's release at the Africa Prosperity Summit organized by Ventures Platform, Odunoluwa Longe, Co-founder of TLP Advisory, stated that the limited number of listings is not because of a shortage of ambition.
"Nigeria's startups have demonstrated their ability to create businesses that can compete on a global scale, yet a significant amount of value continues to leave the country due to limited local exit options," she stated. "The problem isn't a lack of ambition among founders or a rejection of the NGX; it's a gap in information, the perception of illiquidity, and currency differences that make dollar-based exits more appealing," he said.
Longe emphasized that improved coordination among regulators, founders, investors, and government officials is crucial to reestablish the NGX as a reliable venue for innovation at the growth stage.
"By offering clear guidance, hands-on learning, and fostering self-assurance, we can transform the NGX into a real opportunity for generating lasting wealth in Nigeria," she further stated.
The founder and CEO of AltSchool Africa, Adewale Yusuf, expressed agreement that the collaboration should enhance interaction with the technology community.
The NGX should proactively involve founders and leverage them as platforms to demonstrate potential," he stated. "Many of us lack a complete understanding of the process or the necessary criteria. With well-defined frameworks and educational assistance, trust in the local market will increase.
In 2023, Dr. Bosun Tijani, the Minister of Communications, Innovation and Digital Economy, revealed intentions to work with NGX in order to promote technology-related listings through the recently introduced Technology Board — as part of wider initiatives aimed at diversifying the economy. During that period, Temi Popoola, CEO of NGX, assured the Exchange's dedication to fostering innovation and drawing established tech firms to list within the country.
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