The Nigerian Exchange Group (NGX Group)

The Nigerian Exchange Group (NGX Group), formerly known as the Nigerian Stock Exchange (NSE) and originally founded as the Lagos Stock Exchange, stands as the oldest and a pivotal capital market institution in West Africa. This report provides an exhaustive analysis of the NGX, examining its historical evolution, current market structure, recent performance, and strategic positioning within the broader African context. The market’s recent performance has been marked by a notable paradox: a high-performing All-Share Index (ASI) driven by domestic institutional investors and a few large-cap stocks, while foreign portfolio investment has seen a sharp decline. This dynamic is a direct consequence of recent macroeconomic reforms, including the unification of the exchange rate and the removal of fuel subsidies, which have created short-term volatility and a challenging currency environment.

The demutualisation of the exchange in 2021 was a strategic move to transform it into a more efficient, profit-oriented entity, but its success will be measured by its ability to reverse the trend of delistings and attract new listings. While the NGX is a key player in Africa’s largest economy, a comparative analysis with the Johannesburg Stock Exchange (JSE) reveals a significant maturity gap in terms of market capitalization, liquidity, and regulatory frameworks. The recent Investments and Securities Act (ISA) 2025, which enhances the powers of the Securities and Exchange Commission (SEC), represents a critical step toward strengthening market integrity and investor protection. To achieve its vision of becoming a leading exchange hub, the NGX must leverage its technological advancements, accelerate the modernization of its regulatory rulebook, and aggressively pursue dual-listing agreements to enhance its global appeal and diversify its investor base.

Chapter 1: History and Structural Evolution of the Nigerian Exchange

1.1 From Lagos Roots to Pan-Nigerian Reach: A Historical Overview

The foundation of what is today known as the Nigerian Exchange Group dates back to September 15, 1960, with its initial establishment as the Lagos Stock Exchange. This founding preceded Nigeria’s independence by just over two weeks. The Exchange was conceived through the efforts of seven founding subscribers to its Memorandum of Association, including notable figures such as Chief Theophilus Adebayo Doherty, Sir Odumegwu Ojukwu, and Chief Akintola Williams.  

While informal operations had commenced in June 1961, with initial dealings conducted within the Central Bank of Nigeria building, the Exchange officially began trading on August 25, 1961, with 19 securities on its list. The institution’s national scope was formally recognized in December 1977 when its name was officially changed to The Nigerian Stock Exchange (NSE). This change was accompanied by the establishment of branches in Nigeria’s major commercial cities to broaden its reach and deepen the capital market across the country. A key milestone in the market’s development was the launch of the All-Share Index (ASI) in January 1984, which has since served as the primary indicator of the overall performance of the Nigerian equity market.  

Over the decades, the exchange has embraced technological advancements to modernize its operations. An Automated Trading System (ATS) was adopted in April 1999, allowing dealers to trade via a computer network. This was followed by the launch of the X-Gen trading platform in 2013, a next-generation system designed to facilitate electronic trading for both retail and institutional segments of the market and bring about mobile trading technologies.  

1.2 The Transformative Demutualisation of 2021

In a landmark move, the Nigerian Stock Exchange completed a full demutualisation in 2021, marking a fundamental shift from a member-owned, not-for-profit entity to a shareholder-owned, profit-making public limited company. This strategic transformation was designed to enhance efficiency, competitiveness, and transparency, aligning the exchange with global best practices.  

The demutualisation resulted in a new, streamlined corporate structure with a holding company and three key subsidiaries. The Nigerian Exchange Group Plc (NGX Group) serves as the non-operating holding company. Under its umbrella are three wholly-owned subsidiaries, each with a distinct mandate:  

• Nigerian Exchange Limited (NGX): This is the operating exchange, responsible for providing a platform for listing and trading various securities, including equities, bonds, and derivatives.  
• NGX Regulation Limited (NGX RegCo): As the independent regulatory arm, NGX RegCo’s mandate is to enforce equitable principles of listing and trading and maintain a fair and orderly financial market.  
• NGX Real Estate Limited (NGX RelCo): This subsidiary manages the real estate assets of the Group.  

The strategic intent behind this restructuring was to foster growth and global competitiveness, enabling the NGX Group to expand into new capital market verticals. However, a notable paradox exists in the current market environment. While the demutualisation was intended to attract more listings and improve market efficiency, the Nigerian market has simultaneously experienced a wave of delistings, with nearly a dozen companies voluntarily exiting the exchange in the past two years. This phenomenon indicates that a change in corporate structure alone cannot solve the fundamental market issues that drive companies to delist, such as low share liquidity, weak financial performance, and strategic reorganizations. The long-term success of the demutualisation initiative will depend on its ability to translate the new structure into tangible market improvements that reverse the delisting trend and attract a robust pipeline of new public offerings.  

Table 1: The NGX Group Structure (Post-Demutualisation)  

Chapter 2: Market Structure and Investment Instruments

2.1 A Multi-Asset Trading Ecosystem

The NGX operates a modern, fully electronic, hybrid trading system that offers a diverse range of investment products to domestic and international investors. The Exchange serves as a platform for raising capital and facilitating a secondary market for trading a comprehensive range of securities. These include equities, fixed-income securities, Exchange Traded Products (ETPs), and derivatives.  

Equities, or shares, represent a capital stake in a company and are a primary investment instrument on the NGX. They allow investors to benefit from potential capital growth and dividend payments. The market accommodates different types of shares, such as ordinary shares, which provide voting rights and a share of profits, and preference shares, which entitle holders to a fixed, preferential distribution of dividends before ordinary shareholders. The NGX also lists a variety of Fixed Income securities, including government bonds and Sukuk, and has a growing derivatives market. The Central Securities Clearing System Plc (CSCS) serves as the licensed Central Depository, providing automated clearing, settlement, and custodial services for transactions in the capital market.  

2.2 The Differentiated Equity Boards and Their Listing Criteria

To accommodate companies of varying sizes and maturity, the NGX operates several distinct market boards, each with its own set of listing requirements. This structure is designed to provide a tailored pathway for companies to access capital based on their stage of development, financial health, and governance standards.  

• NGX Premium Board: This board is reserved for large, well-established companies that demonstrate a commitment to the highest standards of corporate governance. To qualify, a company must have a market capitalization of at least N200 billion and score a minimum of 70% on the Corporate Governance Rating System (CGRS). A public float of at least 20% of the issued share capital is also required. The Premium Board provides global visibility and enhanced credibility, which can be particularly attractive to international investors and companies considering cross-border listings.  
• NGX Main Board: This is the primary market for established companies with a solid track record. The Main Board offers three different listing standards (A, B, and C) to provide flexibility based on a company’s financial profile. Key requirements for this board include:
  • Profitability: Standard A mandates a cumulative pre-tax profit of at least N300 million over the last three fiscal years, with a minimum of N100 million in two of those years. Standard B requires a cumulative pre-tax profit of at least N600 million over the last one or two fiscal years.  
  • Operating Track Record: A minimum of three years of operational history is generally required across the standards, although alternatives are provided for new businesses with a strong core investor or technical partner.  
  • Shareholders’ Equity: A minimum shareholders’ equity of N3 billion is required for Standard A and B.  
  • Public Float: A minimum of 20% of the issued share capital must be available to the public and held by at least 300 shareholders for standards A and B.  
• NGX Growth Board: This board is specifically designed to support the growth of small and medium-sized enterprises (SMEs) by providing a platform for them to raise long-term capital and promote liquidity. The Growth Board features relaxed entry and post-listing criteria compared to the Main and Premium boards, making it accessible to fast-growth companies, particularly those in the technology sector. The board is segmented into an Entry Segment and a Standard Segment, with minimum market capitalization requirements of N50 million and N500 million, respectively.  

Table 2: NGX Boards and Listing Requirements  

Chapter 3: Market Performance and Macroeconomic Context

3.1 Market Performance Analysis (H1 2025)

The Nigerian Exchange has demonstrated impressive headline performance in the first half of 2025. The NGX All-Share Index (ASI) recorded a significant year-to-date return of +37% as of August 2025, reaching a record high of 102,401.88. The overall market capitalization has seen a parallel increase, with the equity market cap reaching N89.2 trillion.  

This surge has been fueled by strong performance across key sectors. The agriculture sector was the top performer in the first half of 2025, with a combined market capitalization growth of 126.5%, led by stocks like Presco and Ellah Lakes. The healthcare sector followed with a robust 71.6% gain, boosted by Neimeth and Fidson, while the consumer goods sector rose by 52.2%. The information technology sector posted a solid 31.7% gain, largely powered by the strong performance of MTN Nigeria, which saw its market value surge by 79%.  

The market rally has propelled a wave of Nigerian companies into the billion-dollar valuation club, with the number of companies exceeding a market capitalization of $1 billion nearly doubling to 18 as of August 1, 2025. The following table shows the top companies by market capitalization, providing a clear view of market concentration.  

Table 3: Top 10 Most Capitalised Companies on the NGX (as of Aug 1, 2025)  

3.2 The Paradox of Performance and Shallow Market Breadth

While the headline performance of the NGX is impressive, a deeper examination reveals a significant fragility. The rally appears to be a domestic institutional-led phenomenon rather than a result of broad-based investor confidence. Data from April 2025 shows that foreign portfolio investment (FPI) into the equities market fell sharply by 92.39%, dropping from N349.97 billion in March to N26.64 billion, with total foreign transactions plummeting by 90.99%. This resulted in a net capital outflow and a significant decrease in foreign participation in the market.  

In stark contrast, domestic investors dominated trading in April 2025, accounting for 86.92% of the market activity. This indicates that the market is anchored by local capital, with domestic institutions increasing their activity. The rally is primarily concentrated in a few large-cap stocks, such as MTN Nigeria and Dangote Cement, which drive the All-Share Index’s performance. This concentration, combined with a relatively illiquid market, where trading volumes are low compared to regional peers, suggests that the headline performance masks a fundamental lack of broad-based market depth. The low liquidity presents a risk for investors who may struggle to exit their positions without significantly impacting the share price.  

3.3 The Impact of Macroeconomic Reforms on the Capital Market

The recent economic reforms implemented by the Nigerian government, specifically the removal of fuel subsidies and the unification of exchange rates, have had a complex and dual impact on the capital market. The government has framed these policies as essential for long-term economic transformation, aiming to free up financial resources and restore credibility to the foreign exchange market.  

The immediate consequences, however, have been challenging. The unification of exchange rates led to a rapid and significant depreciation of the Naira, falling from N458 per US dollar in May 2023 to N1551.52 by October 2024. This depreciation, coupled with the subsidy removal, has caused soaring inflation and increased the cost of imported raw materials, creating a difficult operating environment for businesses.  

A seeming contradiction emerges when examining investor sentiment. On one hand, the NGX Group Chairman notes that these reforms have “reignited investors’ confidence” and attracted over $50 billion in FDI commitments. On the other hand, foreign portfolio investment has plummeted. This divergence can be understood as a distinction between long-term and short-term capital. The FDI commitments are from long-term, strategic investors who see the reforms as a credible and necessary path toward future economic stability, despite the current volatility. Conversely, FPI, which is more sensitive to immediate market conditions, has been deterred by the rapid currency fluctuations and the uncertainty surrounding the ability to repatriate funds in a timely manner. The reforms, therefore, serve as a double-edged sword, attracting patient, long-term capital while simultaneously deterring the more liquid, short-term portfolio flows that contribute to day-to-day market liquidity.  

Chapter 4: Foreign Investment and the Path to Repatriation

4.1 Trends in Foreign Capital Flows

Nigeria’s foreign investment inflows have faced significant headwinds. Overall foreign investment inflows fell by 26.7% in 2023, primarily due to political risks and elevated production costs, though a reversal of this trend was noted in the fourth quarter of 2023 following pro-market reforms.  

The flow of foreign capital into Nigeria’s capital market is categorized into two main types: Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI). While FDI represents a long-term commitment to establishing businesses and acquiring assets, FPI involves investment in existing stocks and securities. The NGX has been significantly impacted by a sharp decline in FPI, which is more sensitive to macroeconomic instability. As noted in the previous chapter, foreign portfolio investment plummeted by 92.39% in April 2025, and year-to-date foreign flows remain negative, showing a net outflow of N36.48 billion. This trend highlights the market’s vulnerability to external shocks and the continued hesitation of international investors.  

4.2 The Investor’s Journey: Navigating the Market

The Nigerian government has taken steps to encourage foreign investment by abolishing legislation that once prevented the flow of foreign capital. As a result, investors of any nationality are now free to invest in the NGX. However, foreign investors must navigate a clear process to participate in the market.  

To invest in the NGX, a foreign investor must appoint a licensed securities dealer or stockbroker, who is a registered Trading License Holder, to facilitate account opening and trading. This process involves fulfilling regulatory Know-Your-Client (KYC) requirements, which for non-residents, includes notarized copies of a valid means of identification and proof of foreign address. The stockbroker will then open two accounts on behalf of the investor: a Central Securities Clearing System (CSCS) account and an in-house stockbroking account.  

4.3 The Critical Role of the Certificate of Capital Importation (CCI)

For a foreign investor, one of the most critical documents for navigating the Nigerian financial landscape is the Certificate of Capital Importation (CCI). A CCI is issued by an authorized dealer on behalf of the Central Bank of Nigeria (CBN) and serves as official evidence of an inflow of foreign direct capital, whether in the form of equity, debt, cash, or goods.  

The primary advantage of obtaining a CCI is that it guarantees the holder the right to repatriate their investment capital and proceeds at the official market rate upon the maturity of the investment. While not legally mandatory, obtaining a CCI is highly recommended to mitigate the risk of adverse exchange rate fluctuations in the foreign exchange (FX) market. The CCI ensures that an investor can repatriate funds through the official market, which typically offers more stable and favorable rates compared to the unofficial or parallel market.  

The process of fund repatriation, however, is not without its challenges, especially in a “stressed market” with a shortage of FX. While a CCI provides a guarantee, the CBN may direct authorized dealers to ration the disbursement of FX and prioritize certain industries. Without a CCI, an investor faces a more complicated process, particularly for large sums, and is exposed to both a convertibility risk (the inability to find sufficient FX from independent sources) and a transferability risk (potential restrictions on FX transfers out of the country). The legal framework, including the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, ensures the freedom to repatriate profits and dividends, but compliance with regulatory requirements, such as obtaining a CCI, is essential.  

Chapter 5: Regulatory Environment and Market Integrity

5.1 The Dual Regulatory Structure: SEC vs. NGX RegCo

The Nigerian capital market operates under a dual regulatory structure that includes both a government-mandated oversight body and an independent regulatory arm of the exchange itself. This system is designed to ensure comprehensive surveillance and adherence to market rules.

The primary regulatory institution is the Securities and Exchange Commission (SEC), a government agency supervised by the Federal Ministry of Finance. The SEC’s mandate is to regulate and develop the Nigerian capital market, ensuring orderly and equitable dealings in securities and protecting the market from abuses like insider trading. The SEC’s legal authority is derived from the Investments and Securities Act.  

In parallel, NGX Regulation Limited (NGX RegCo) serves as an independent subsidiary of the NGX Group. It is tasked with promoting and enforcing just and equitable principles of listing and trading to maintain fair and orderly financial markets. While the NGX is privately owned and self-regulating, the SEC maintains a broad surveillance role over its operations. This dual structure is critical for maintaining market integrity and promoting investor confidence.  

5.2 The Investments and Securities Act (ISA) 2025: A New Legal Framework

The recent passage of the Investments and Securities Act (ISA) 2025 represents a significant step forward in modernizing the Nigerian capital market’s legal framework. The Act strengthens the SEC’s authority and introduces new provisions to enhance market integrity, investor protection, and systemic risk mitigation.  

A key aspect of the ISA 2025 is its explicit empowerment of the SEC to regulate emerging financial technologies and assets. It introduces provisions that give the SEC oversight over Virtual Asset Service Providers (VASPs), Digital Asset Offering Platforms (DAOPs), and Digital Asset Exchanges. This mandates their registration with the SEC and requires adherence to anti-money laundering protocols and investor protection measures.  

The new Act also enhances the SEC’s ability to monitor and mitigate systemic risks. It explicitly grants the SEC the authority to suspend trading on specific assets or across entire exchanges when necessary to maintain market stability during crises, such as sudden market crashes or speculative bubbles. Furthermore, the ISA 2025 strengthens the SEC’s oversight of corporate actions. It mandates that public companies must seek prior approval from the SEC for schemes related to corporate restructurings, ensuring fair and transparent processes and protecting minority shareholders from unfair dealings. The Act also criminalizes prohibited schemes like Ponzi and pyramid structures.  

Chapter 6: Strategic Outlook and Competitive Analysis

6.1 NGX vs. JSE: A Comparative Analysis

The NGX and the Johannesburg Stock Exchange (JSE) are often considered the two major frontier markets in Sub-Saharan Africa. While a recent study found the NGX to be the second most developed of the major African exchanges behind the JSE, a detailed comparison reveals a significant maturity gap. The JSE’s established history, dating back to 1887, has given it a considerable advantage in scale, liquidity, and global integration.  

A direct comparison on key metrics illustrates this disparity:

• Market Capitalization: The JSE’s market capitalization of approximately $1.21 trillion significantly dwarfs the NGX’s market capitalization of around $45-52 billion.  
• Liquidity: The JSE boasts deep market liquidity, with a daily average trade volume of approximately $1.24 billion. In contrast, this amount is equivalent to one-third of Nigeria’s total volume traded in the first six months of 2025, underscoring the NGX’s relative illiquidity.  
• Listing Activity: The JSE recorded eleven IPOs in the last two years, valued at approximately $7.6 billion, while the NGX had only three IPOs during the same period, valued at $3.1 billion.  
• Number of Listings: The JSE has over 400 listed companies and approximately 800 listed securities, whereas the NGX has around 150 listed companies and 393 listed securities.  
• Dual Listings: The JSE’s aggressive pursuit of bilateral agreements has resulted in 45 dual-listed companies and over 126 dual-listed securities, which contribute more than 50% to its market capitalization. The NGX, in contrast, has only four dual-listed companies.  
• Regulatory Framework: The JSE updated its comprehensive rulebook in 2024 to reflect modern governance and ESG practices, while the NGX’s most recent comprehensive rulebook dates back to 2015.  

The JSE’s dominance is a result of its mature infrastructure, strong institutional investor participation, and greater international visibility. The NGX’s impressive year-to-date return, while notable, is an isolated metric and does not reflect a comparable level of market depth or maturity.  

Table 4: NGX vs. JSE: Key Comparative Metrics  

6.2 Emerging Opportunities, Challenges, and Future Outlook

The NGX operates in Africa’s largest economy and is central to the government’s vision of achieving a $1 trillion economy by 2030. The market has a unique opportunity to capitalize on high-growth sectors that have recently demonstrated strong performance, such as agriculture, healthcare, and technology. The NGX is strategically positioning itself to mobilize long-term capital for infrastructure and tech ventures, which are seen as critical for accelerating economic growth and boosting the nation’s GDP.  

However, significant challenges persist. The wave of delistings, driven by low liquidity, weak company performance, and strategic reorganizations, is a major concern. An illiquid market is unattractive to investors who require the ability to enter and exit positions efficiently. To address this and enhance its competitive position, the NGX should actively pursue several strategic initiatives. Drawing from the JSE’s playbook, the NGX could aggressively chase dual-listing agreements with other global and African exchanges and invest further in technology to facilitate cross-border transactions and improve market accessibility for all investors. A critical step would be to expedite the update of its comprehensive rulebook to align with modern international standards, including provisions for ESG integration and Halal-compliant securities.  

Conclusion and Recommendations

The Nigerian Exchange Group is a market of immense potential, underpinned by a dynamic economy and a recently demutualized, more efficient corporate structure. Its recent headline performance, with the All-Share Index reaching record highs, is a testament to the capital market’s ability to mobilize domestic investment and capitalize on the performance of a few key sectors.

However, this analysis reveals that the current rally is a fragile phenomenon, driven predominantly by domestic institutional capital and a handful of large-cap stocks. The market’s high volatility, shallow liquidity, and the sharp decline in foreign portfolio investment, largely a consequence of the dual macroeconomic reforms, pose significant challenges to its long-term stability and growth. The persistent trend of delistings and the considerable maturity gap between the NGX and its regional peer, the JSE, highlight the need for continued structural and regulatory reform.

Based on this analysis, the following recommendations are proposed:

1. For the NGX: The exchange must go beyond structural reform and focus on fundamental market enhancements. This includes aggressively pursuing dual-listing agreements to attract foreign capital and increase liquidity, as well as expediting the update of its regulatory rulebook to align with modern governance and technological standards.
2. For Institutional and Foreign Investors: A nuanced understanding of the market is crucial. While the NGX presents opportunities for significant returns, these are currently concentrated in a few, high-performing sectors. Investors should approach the market with a long-term perspective, leveraging instruments like the Certificate of Capital Importation (CCI) to mitigate currency repatriation risks and focusing on investments in companies that demonstrate strong fundamentals and are less exposed to currency volatility.
3. For Corporate Strategists: Companies considering a listing should conduct a thorough analysis of market liquidity and investor appetite beyond the headline index performance. The high rate of delistings suggests that a public listing is not a viable strategy for all companies, and a careful assessment of market conditions is essential for successful capital formation and investor relations.