Nigeria's Frontier Market Status Faces New Setback

Nigeria's efforts to regain its frontier market status have encountered a significant setback as FTSE Russell announced a postponement of the country's reclassification. This decision, made on June 30, 2023, was influenced by concerns regarding Nigeria's newly introduced T+1 securities settlement regime, which poses operational challenges for foreign institutional investors.

Despite Nigeria's transition to a T+1 settlement cycle on June 1, 2023, becoming the first African capital market to implement this framework, FTSE Russell expressed worries that the shorter settlement timeline complicates operations across different jurisdictions. The country had previously been downgraded to an unclassified market in 2023 due to persistent foreign exchange illiquidity.

FTSE Russell's interim review, scheduled for March 2026, acknowledges the significant reforms undertaken by Nigeria's capital market, including efforts by the Securities and Exchange Commission, Nigerian Exchange, and Central Bank of Nigeria to enhance market liquidity and reduce transaction costs. However, the review emphasizes the need for improved foreign exchange access and streamlined processes to attract global investors.