Nigeria edges closer to FTSE Russell Frontier Market return

NIGERIA is on course to regain its place in the frontier market after FTSE Russell resolved concerns that had threatened to delay the country’s reclassification.

The global index provider is expected to formally confirm the decision later this week, according to sources familiar with the development, potentially bringing an end to months of uncertainty over Nigeria’s return to the classification.

The decision is significant for Nigeria’s capital market because inclusion in FTSE Russell’s Frontier Market indices can improve the visibility of Nigerian equities among international investors and potentially support foreign portfolio flows.

Nigeria’s reclassification had initially been scheduled to take effect from September 21, 2026. However, FTSE Russell placed the process under ‘further review’ in June after the Nigerian market adopted a T+1 settlement cycle on June 1.

The shift reduced the time required to settle equity transactions from two business days to one. While the reform was designed to improve market efficiency, FTSE Russell raised concerns that it could create a requirement for international investors to prefund trades.

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Such a requirement would have counted against Nigeria under FTSE Russell’s ‘Settlement Cycle (DvP)’ criterion, one of the five Quality of Markets requirements used in assessing Frontier Market eligibility.

The Securities and Exchange Commission subsequently moved to address the concern by clarifying that foreign portfolio investors are not required to prefund their accounts to trade Nigerian securities.

The SEC also explained that transactions processed through the Central Securities Clearing System (CSC) are settled at 5:00 p.m. on T+1 and continue to operate under the standard delivery versus payment framework.

The clarification appears to have helped remove a major obstacle to the reclassification, allowing Nigeria’s planned return to remain on track.

Nigeria’s latest push back into the Frontier Market category follows its removal from FTSE Russell’s Frontier Market indices in September 2023. At the time, international investors were struggling with difficulties in accessing foreign exchange (FX) and repatriating investment proceeds.

The situation has since improved, with FTSE Russell acknowledging progress in Nigeria’s FX market and the clearing of outstanding FX backlogs when it approved the country’s return earlier this year.

For Nigeria, the reclassification would represent more than a change in market label. It would signal that some of the structural concerns that previously discouraged international investors have eased, although the country would still need to maintain improvements in market liquidity, FX access and settlement infrastructure.

FTSE Russell is expected to provide further details when it formally announces its decision later this week.