Global index provider FTSE Russell has added Nigeria to its Watch List for a possible reclassification from Unclassified to Frontier Market status, signaling renewed confidence in the country’s policy reforms and foreign exchange management after years of financial isolation.
The move, announced in FTSE Russell’s 2025 Annual Equity Country Classification Review, follows significant progress in restoring liquidity and easing foreign exchange bottlenecks that had previously restricted foreign investors from repatriating funds.
FTSE Russell stated that Nigeria’s inclusion on the Watch List will allow for “in-depth engagement” with the Central Bank of Nigeria (CBN), the Securities and Exchange Commission (SEC), and other market participants before any reclassification decision is made.
“Following confirmation from market participants that the delays in repatriating capital from Nigeria and associated FX queues have been largely cleared since the beginning of 2025, the FTSE Russell Index Governance Board approved the addition of Nigeria to the FTSE Watch List,” the report said.
The decision reflects improving confidence among institutional investors who have begun to re-engage with Nigeria’s capital market, encouraged by the CBN’s ongoing currency reforms and efforts to unify the exchange rate system.
If reinstated, Nigeria would regain access to FTSE’s Frontier Market Index, a benchmark tracked by several global funds. Analysts estimate that reclassification could attract hundreds of millions of dollars in new inflows and restore foreign participation at the Nigerian Exchange Limited (NGX).
Nigeria was removed from all FTSE global indices in September 2023, after persistent dollar shortages made it impossible for investors to repatriate dividends and proceeds. The downgrade forced global frontier funds to liquidate Nigerian holdings, triggering capital outflows and weakening the equities market.
Since then, Nigeria’s financial authorities have embarked on extensive reforms to rebuild investor confidence. Under Governor Olayemi Cardoso, the CBN has implemented policies aimed at clearing the foreign exchange backlog, harmonizing the FX market, and restoring transparency in official transactions.
These measures, combined with improved communication with the market, have led to greater stability in the naira and shorter delays in foreign exchange access. International investors and financial institutions have since acknowledged these improvements as steps toward restoring Nigeria’s credibility in the global investment landscape.
Alongside the announcement, FTSE Russell published its Quality of Markets (QoM) review for Nigeria, providing a detailed assessment of the country’s market infrastructure. The review commended regulatory transparency and oversight by both the SEC and the NGX, highlighting improvements in disclosure standards and market governance.
The Central Securities Clearing System (CSCS) also received strong ratings for its reliable T+3 settlement cycle and efficient custodian network, which ensures prompt and secure transactions.
However, the report pointed out that key structural weaknesses persist. The FX market was rated “Not Met” due to limited dollar availability, wide bid-ask spreads, and inconsistent liquidity that continue to discourage portfolio investors. Transaction costs were described as uncompetitive, while the absence of short-selling, stock lending, and derivatives markets limits investor flexibility and hedging opportunities.
Nigeria’s addition to the FTSE Watch List marks a potential reversal of its 2023 downgrade — a critical step toward rebuilding global investor confidence. Re-entry into the Frontier Market Index would restore visibility to international funds, increase passive investment flows, and deepen liquidity in the domestic market.
Market experts see the announcement as both a vote of confidence and a test of policy sustainability. According to independent analyst Adewale Ajayi, “FTSE’s decision shows that Nigeria is being taken seriously again. But this is not yet victory — sustaining FX stability, ensuring policy consistency, and maintaining open communication with investors are what will determine full reinstatement.”
FTSE Russell emphasized that Nigeria’s reclassification is not automatic. The next several months will involve close engagement with Nigerian regulators, investors, and global institutions to assess whether reforms are enduring and the market environment remains predictable.
If successful, Nigeria’s reinstatement could draw renewed foreign participation, strengthen capital inflows, and reaffirm its position as one of Africa’s leading frontier investment destinations.
For now, the Watch List inclusion represents cautious optimism — recognition of progress made, but also a reminder of the work still required to secure Nigeria’s full return to the global investment map.
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FTSE Russell Places Nigeria on Watch List for Potential Return to Frontier Market Status
Global index provider FTSE Russell has added Nigeria to its Watch List for a possible reclassification from Unclassified to Frontier Market status, signaling renewed
