Transparency, Funding Key Benefits of NGX Listing for Nigerian Tech Startups, says PwC report

Nigeria has one of the continent’s more established startup ecosystems, with firms like Interswitch dating as far back as 2002. The country has produced five out of seven unicorns in Africa such as Interswitch, Flutterwave, Opay, Andela, and Esusu4.

PwC, an international consulting firm, has released a report highlighting the growth opportunities for Nigerian tech startups through their listing on the Nigerian Exchange Limited (NGX).

The report, titled ‘Growing the Nigerian Technology Ecosystem through the Capital Market,’ identified governance, transparency, funding, talent retention, and long-term sustainability as the benefits of listing on the NGX.

The report also noted that despite the growing tech sector in Nigeria’s economy and significant private funding secured by African tech startups, the tech sector is underrepresented in the Nigerian capital market.

YOU CAN ALSO READ: Fox News pays $787.5m To Settle Dominion Lawsuit Over Election Claims

Only nine technology-based companies out of 157 listed on the NGX, with a combined market capitalisation of circa N11 trillion, are represented on the exchange.

The top 10 companies by market capitalisation on the NGX as of December 31, 2022, were dominated by Information Communication Technology and Industrial goods companies, accounting for 70 percent of the total market capitalisation. The report emphasised that the country’s tech sector was not optimally reflected in the Nigerian capital market.

Nigeria has one of the continent’s more established startup ecosystems, with firms like Interswitch dating as far back as 2002. The country has produced five out of seven unicorns in Africa such as Interswitch, Flutterwave, Opay, Andela, and Esusu4.

Nigeria is home to over 400 tech startups and ranks number one in Africa in terms of venture capital investment destination, leading in both funding and number of equity rounds.

PwC also noted that Nigeria accounted for 23 percent of all equity funding and 27 percent of the total deal count of $1.2 billion raised last year, portraying the country as the preferred investment destination in Africa.

Despite these impressive performances, the Nigerian capital market does not optimally reflect the activities of the tech sector, according to the report.

The PwC report analysed several initiatives in the Nigerian capital market geared towards promoting innovation, growth as well as a technology-driven capital market. In 2021, the Securities and Exchange Commission (SEC) released rules on crowdfunding, which provided guidelines for the registration and operation of crowdfunding platforms and intermediaries.

The SEC also introduced rules on Robo Advisory Services for the regulation of persons or entities seeking to provide digital advisory services in the capital market and the introduction of a Regulatory Incubation program.

The NGX is set to launch a Technology Board, a specialised platform for technology-based companies to list and raise capital on the NGX. PwC hailed the proposed creation of a technology board by the NGX as a laudable initiative, and once launched, it is expected to promote more listings from African technology companies.

YOU CAN ALSO READ: Fox News pays $787.5m To Settle Dominion Lawsuit Over Election Claims

The report also anticipates that this initiative would create an inclusive environment that would serve as a catalyst for further economic advancements while deepening the Nigerian capital market.

PwC further added that the creation of a technology board would increase the attractiveness of the Nigerian capital market to tech-based companies and position the NGX as a preferred exchange hub in Africa.

The report concludes that the listing of Nigerian tech startups on the NGX provides opportunities for growth and success, highlighting the importance of leveraging the capital market for tech startups in the country.