London — Global index provider FTSE Russell has announced that Nigeria has been added to its watch list for potential reclassification as a frontier market, signaling cautious optimism about the country’s progress in addressing foreign exchange challenges that previously hindered investor confidence.
In a statement released on Monday, FTSE Russell said the decision followed a review of Nigeria’s market accessibility, which had been downgraded from “frontier” to “unclassified” in September 2023 due to difficulties in currency repatriation and foreign exchange liquidity constraints.
The firm noted that recent reforms implemented by the Central Bank of Nigeria (CBN) — including the liberalization of the foreign exchange market and the unification of multiple exchange rates — have begun to restore confidence among international investors.
“Following engagement with market participants and consideration of recent policy actions by Nigerian authorities to improve FX liquidity, FTSE Russell has added Nigeria to the watch list for a potential reclassification to frontier market status,” the statement read.
If reinstated, Nigeria’s equities would once again be eligible for inclusion in the FTSE Frontier Market Index Series, potentially attracting renewed foreign portfolio inflows into Africa’s largest economy.
Analysts say the move represents a significant step toward rebuilding Nigeria’s credibility in global capital markets. However, they caution that sustained progress will depend on the CBN’s ability to stabilize the naira and ensure consistent access to foreign exchange for investors.
Nigeria’s exclusion from the FTSE index last year followed months of capital flight and market illiquidity, which deterred foreign investors from participating in the country’s stock and bond markets.
Market observers expect FTSE Russell to make a final determination in its next review cycle, depending on further improvements in FX transparency, repatriation processes, and policy consistency.
If successful, Nigeria would join other African frontier markets such as Kenya, Ghana, and Morocco, reaffirming its role as one of the continent’s key investment destinations.
