Nigeria is seeking to attract more African companies and investors to its capital market through a new depositary-receipt framework and
Nigeria is seeking to attract more African companies and investors to its capital market through a new depositary-receipt framework and listing incentives, as the country targets a more than threefold expansion of its market over the next decade.
The Securities and Exchange Commission (SEC) plans to introduce an African depositary-receipt framework to facilitate cross-border listings, simplify approvals and reduce barriers for companies seeking to raise capital in Nigeria and other African markets.
The initiative forms part of the regulator’s 10-year capital market development plan, unveiled on Monday, which aims to grow the market to N750 trillion ($562 billion) and increase annual diaspora investment to $10 billion.
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The plan also targets a tenfold increase in assets managed by collective investment funds to $56 billion, underscoring the regulator’s ambition to mobilise more domestic and foreign savings into the capital market.
Under the proposed framework, the SEC plans to introduce streamlined approvals, introductory listing-fee incentives, cross-border settlement and custody links, and tax neutrality to encourage participation across African markets.
The regulator also intends to establish rules for foreign companies seeking to list in Nigeria and expand opportunities for Nigerian companies to list in other African jurisdictions.
The initiative could widen the pool of companies available to Nigerian investors while giving local businesses additional channels to attract capital. Its success, however, will depend on whether the proposed incentives can make Nigeria competitive with other African markets in liquidity, transaction costs and investor confidence.
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Five companies in the NGX All Share Index have cross-listings, including Airtel Africa Plc, Seplat Energy Plc, Oando Plc, Ecobank Transnational Inc. and Guaranty Trust Holding Company.
Africa’s largest industrial hub, Dangote Petroleum Refinery & Petrochemicals FZE, is also using global depositary receipts to market its initial public offering to a wider African investor base.
The refinery plans to raise as much as $2.1 billion through the offering, in what has been described as the continent’s biggest IPO to date. The transaction has drawn attention to the potential of Nigeria’s capital market to finance large businesses and attract investors beyond its borders.
Beyond cross-border listings, the SEC plans to modernise its listing rules by introducing free-float thresholds and allowing dual- and multi-class share structures.
It also intends to benchmark issuance and listing costs against those in Kenya, South Africa, Egypt and Morocco, markets it identifies as relevant peers.
The regulator is considering a tiered listing and free-float regime that would establish different market segments with proportionate requirements. The approach is intended to preserve founders’ control of their companies while maintaining market liquidity and investor protection.
The proposed reforms signal a broader effort to make Nigeria’s capital market more accessible to businesses at different stages of growth while strengthening its appeal to regional and international investors.
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Wasiu Alli is a business, economics cum data journalist with strong expertise covering macro trends, capital markets, government policies, corporate earnings and comparative economics analysis. Alli turns raw data into trends that not only tells compelling stories but nudges investors to make valued and informed decisions. He’s an alumnus of Lagos State University and trained at Lagos Business School. He formerly heads the Companies and Markets desk at BusinessDay where he writes and supervises the production of well researched articles on earnings updates, corporate sectoral comparisons, market intelligence as well as interviews with C-suite executives.