World index supplier FTSE Russell has added Nigeria to its Watch Checklist for a potential reclassification from Unclassified to Frontier Market standing.
The transfer alerts renewed confidence within the nation’s capability to repatriate overseas capital after years of overseas change challenges.
The motion follows the discharge of FTSE Russell’s 2025 Annual Fairness Nation Classification Evaluation, which famous that FX queues and repatriation delays have largely been cleared since early 2025.
The choice comes two years after Nigeria was faraway from all FTSE international indices as a result of acute greenback shortages that left overseas traders unable to exit the market.
In a be aware seen by Nairametrics, FTSE stated the Watch Checklist standing permits “in-depth engagement” with Nigerian authorities and market contributors forward of a possible reclassification.
“Because of the suggestions acquired from the FTSE Fairness Nation Classification Advisory Committee and the FTSE Russell Coverage Advisory Board, the FTSE Russell Index Governance Board accepted the addition of Nigeria to the FTSE Watch Checklist for potential reclassification from Unclassified to Frontier market standing”, the report acknowledged.
The step displays suggestions from traders who confirmed enhancements in overseas change liquidity beneath the Central Bank of Nigeria’s (CBN) reform program.
“Following affirmation from market contributors that the earlier reported delays within the capability to repatriate capital from Nigeria and related overseas change queues that resulted in Nigeria being downgraded to Unclassified market standing from September 2023, have been cleared for the reason that starting of 2025.
The inclusion means Nigeria is now beneath statement for a potential return to the FTSE Frontier Market Index, a transfer that might restore its visibility to international institutional traders and appeal to a whole lot of tens of millions of {dollars} in passive inflows from funds benchmarked to FTSE indices.
Nonetheless, FTSE emphasised that reinstatement is just not automated and that It would rely upon continued FX stability, predictable repatriation timelines, and affirmation from traders that reforms are sustainable.
In line with FTSE, the Watch Checklist exists to “alert the broader market that in-depth engagement is happening with a market that’s being thought-about for a reclassification change and offers a possibility for traders to share their expertise of working available in the market to be able to plan for a possible classification change.”
Alongside the announcement, FTSE revealed its High quality of Markets (QoM) Evaluation for Nigeria, which supplied a blended evaluation of the capital market.
Whereas regulatory oversight and market transparency scored effectively, the overview highlighted persistent weaknesses in overseas change entry, transaction prices, and derivatives improvement.
The FX market was rated “Not Met”, reflecting restricted greenback availability and huge spreads that also frustrate portfolio traders.
Transaction prices have been additionally deemed uncompetitive, whereas short-selling, inventory lending, and derivatives buying and selling stay restricted or underdeveloped.
In distinction, the report praised the Securities and Change Fee (SEC) and the Nigerian Change Restricted (NGX) for sustaining energetic supervision and bettering disclosure requirements.
Nigeria’s clearing and settlement methods, operated by the Central Securities Clearing System (CSCS), have been rated positively with a dependable T+3 settlement cycle and good custodian competitors.
Nigeria’s addition to the Watch Checklist represents a possible reversal of its 2023 downgrade, when FTSE eliminated the nation fully from its indices following widespread investor complaints about FX illiquidity.
The downgrade pressured international passive funds to liquidate Nigerian holdings, triggering capital outflows and weakening overseas participation on the NGX. Returning to the Frontier Index would assist Nigeria regain publicity amongst frontier-market traders and rebuild belief.
FTSE stated it could proceed to have interaction with Nigerian authorities and worldwide traders to watch the progress of reforms. The result of this engagement will decide whether or not Nigeria is reclassified within the subsequent overview cycle.
