Last week, OPay filed its prospectus ahead of a planned listing on the New York Stock Exchange.
Somewhere in the pages of the prospectus, it noted that a secondary listing on the Nigerian Exchange (NGX) was also on the cards.
Should it eventually happen, it would mark a major milestone for Nigeria’s capital market and help set the stage for more technology companies to follow. But whether or not that happens, questions must be asked about the NGX’s tech board and its stated goal of getting local technology companies to list on the exchange.
Initial public offerings (IPOs) are among the most high-profile ways tech startups return money to investors. They also give retail and institutional investors an opportunity to participate in the growth of companies they could not have invested in at an early stage.
With African startups building products that increasingly touch every area of the average Nigerian’s life, the NGX figured it could attract some of these companies to go public locally.
To that end, it created a separate board — the tech board — to woo technology companies. It divided prospective issuers into two categories: the startup segment, targeting companies valued at under $100 million, and the big tech segment, targeting companies valued above $100 million but below $1 billion.
The tech board was also launched at an opportune time for Nigerian startups. Venture capital was becoming less adventurous, and funding was getting harder to secure, even for growing companies.
A local exchange could provide an alternative source of capital and a route for early investors to exit.
On paper, this was a promising development. A little over four years later, however, nothing concrete has come of it. No startups have listed, and even if OPay eventually does, its expected $4 billion valuation would put it outside the tech board’s target range.
Startups valued at under $100 million are hardly difficult to find. So why has none listed after all this time?
The problem starts with where startups are incorporated
For Segun Cole, co-founder and CEO of Maasai, a platform that helps investors and startups buy and sell startup shares through secondary transactions, the primary reason the board has not translated into listings is the structure of African startups.
The average Nigerian startup that has raised venture capital, or hopes to, has a holding company incorporated in Delaware, the UK, or Mauritius. This structure is not unusual: it makes fundraising easier and gives international investors a familiar legal framework.
“Listing in Lagos means restructuring the group, repricing in naira, and accepting naira liquidity. For most founders and their VCs, that trade has not been worth it,” he tells Condia.
The NGX tech board does not adequately account for this fundamental feature of the startup ecosystem.
As a result, it offers little clarity on how companies with offshore holding structures can list without undertaking a potentially complicated corporate restructuring.
In 2024, media reports suggested the NGX was engaging with startups. Its CEO even indicated that “one or two startups” could list that year. But neither Cole nor some of the founders Condia spoke to for this piece were aware of any recent engagement by the exchange aimed at getting startups to list.
While the tech board has gone quiet, the NGX itself has not abandoned its ambitions. CEO Temi Popoola first tried to woo Flutterwave in 2023. More recently, he appealed to the Nigerian president to encourage startups such as OPay to list locally.
The problem is bigger than the listing rules
Beyond the fact that African startups are often headquartered in different jurisdictions, other factors are at play. For one, the Nigerian capital market is not yet well suited to venture-backed technology companies.
We have explored this argument in a previous piece. Perhaps an OPay listing could begin the hard work of convincing investors that they can look beyond established blue-chip companies with steady revenues and consider younger businesses whose valuations might appear difficult to justify against those of existing listed companies.
However, this challenge is unlikely to disappear anytime soon.
“The market was built for dividend-paying blue chips, and its biggest pools of capital, pension funds and insurers, are mandated to stay there. Startups read that correctly and look elsewhere. NGX could do more, but marketing cannot fix a mismatch in who the buyers are,” Cole says.
Consider pension funds. They control substantial pools of domestic capital, but their investment rules and risk-management obligations limit their exposure to early-stage, loss-making companies. This leaves startups dependent on a relatively narrow pool of investors, many of whom measure returns in dollars.
That creates another problem. Even if a startup can list locally, a naira-denominated exit may reduce the dollar value of an investor’s proceeds if the currency depreciates.
For venture capitalists managing dollar-denominated funds, the prospect of a local listing is therefore not automatically attractive.
The challenge is not simply persuading startups to list. It is making a Nigerian listing commercially viable for the companies and investors involved.
What would make the tech board work?
Cole is not dismissive of the potential for startups to list on the NGX through its tech board. Instead, he proposes several changes.
The first acknowledges the inherently global nature of startups.
“Make it practical to list a group with an offshore holding company, through redomiciliation, depositary receipts or a clear cross-border route.”
Such a framework could remove a significant structural barrier, allowing startups to access Nigerian investors without first undertaking an expensive and complicated restructuring.
The second solution involves tapping into local pools of capital. Pension funds and insurance companies have access to substantial investment capital, but their exposure to technology companies remains limited.
Cole argues that getting these institutions to allocate even a small percentage of their portfolios to eligible growth companies could be catalytic.
There is already a precedent for targeted regulatory flexibility. Ahead of the Dangote Refinery IPO, the National Pension Commission granted a specific waiver allowing pension fund administrators to set aside certain profitability and dividend-history requirements that would otherwise have constrained their participation.
A similar, carefully designed framework for qualifying technology listings could help broaden the pool of domestic investors, although it would require a separate policy decision.
Finally, Cole argues that public listings should be treated as a partial exit for early investors. Rather than viewing an IPO solely as a way for a company to raise fresh capital, the NGX could make it easier for existing shareholders to sell part of their holdings.
That liquidity could then be recycled into new startups, creating more opportunities for investment across the ecosystem.
There is a broader lesson here. Countries facing similar challenges, including currency depreciation and dependence on foreign venture capital, cannot build vibrant technology listing markets simply by creating a separate board and inviting startups to join it. They must also address the concerns of founders, investors, and the institutions expected to buy their shares.
For Nigeria, the goal should not be to force startups to abandon international capital or dollar-denominated funding. It should be to make the NGX a credible additional fundraising and exit venue.
OPay’s potential listing could provide an important test of investor appetite. But a sustainable pipeline of technology listings will require more than one high-profile company. It will require rules that accommodate global corporate structures, domestic investors willing and able to finance growth companies, and a credible answer to the currency-risk problem.
Until then, the NGX tech board risks remaining a good idea without the market infrastructure needed to make it work.