A new report by Tech Leadership Partners (TLP) has revealed that Nigerian startups are staying away from the Nigerian Exchange (NGX) due to persistent structural issues, including misaligned incentives, low market liquidity, and regulatory bottlenecks. The report highlights that although Nigeria has one of Africa’s most vibrant startup ecosystems, the pathway from early-stage funding to public listing remains largely inaccessible for most founders.
According to the TLP report, the biggest challenge lies in the disconnect between what startups need to scale and what the capital market currently offers. Startups typically seek flexible funding, long-term growth capital, and supportive investor structures, while the NGX still leans heavily toward traditional corporate models requiring stable profitability, predictable cashflows, and stringent disclosures that many young tech companies are unable to meet at early stages. This mismatch discourages founders from considering the public market as a viable route.
The report further notes that Nigeria’s capital market remains shallow, with limited institutional participation and low free-float levels. As a result, founders worry that listing on the NGX would not provide the liquidity needed to raise substantial capital or create competitive valuations. Many instead turn to foreign venture capital, private equity, or offshore stock exchanges that offer more robust investor participation.
Regulatory uncertainty also plays a significant role. The TLP report points out that startups often face unclear listing requirements, lengthy approval processes, and a lack of tailored frameworks for high-growth digital companies. While the NGX has in recent years introduced initiatives to attract tech firms—such as growth boards and reduced listing barriers—the report argues that more targeted reforms are needed.
Another factor highlighted is trust. Some founders believe that Nigeria’s public market infrastructure is not yet equipped to support the transparency and governance standards demanded by global tech investors. This perception pushes startups to incorporate overseas and pursue listings in more mature markets such as the U.S. or U.K.
The TLP report recommends deeper capital market reforms, improved investor education, and the creation of tech-focused listing segments designed specifically for high-growth companies. If these changes are implemented, analysts believe that Nigerian startups could gradually view the NGX as a strategic destination for long-term capital, unlocking new opportunities for the country’s tech-driven economy.
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