Nigeria’s Securities and Exchange Commission (SEC) is exploring a framework to make it easier for African companies to attract Nigerian investors as the country works to grow its capital market from approximately ₦250 trillion to ₦750 trillion over the next decade.
According to a Bloomberg report cited by TechNext, the proposed African depositary-receipt framework would support cross-border listings, allowing investors in Nigeria to access shares in companies listed in other African markets through approved local arrangements.
How the framework could work
Depositary receipts allow investors to gain exposure to shares in foreign companies without purchasing those shares directly on an overseas stock exchange.
Under the proposed framework, a company listed in another African country could make its shares accessible to Nigerian investors through depositary receipts traded within Nigeria’s market infrastructure. The underlying shares would be held by a custodian under the applicable rules.
The arrangement could simplify cross-border investing and give African businesses access to a wider pool of capital.
Why it matters for Nigeria’s capital market
The initiative forms part of broader efforts to deepen Nigeria’s financial market, attract investment and strengthen the country’s position as a regional financial hub.
If implemented effectively, the framework could help Nigerian investors diversify their portfolios while giving African companies another route to raise funds for expansion.
However, success will depend on regulatory cooperation, clear listing requirements, reliable custody and settlement systems, and investor confidence.
The need for better regional access is already evident. Other African exchanges are also exploring depositary receipts, including a proposal by the Egyptian Exchange to give local investors exposure to Dangote Group companies.
Nigeria’s proposed framework could help address some of the barriers that currently make cross-border investing difficult across the continent.
While the initiative is still at the planning stage, it signals a push towards more connected African capital markets. Whether it delivers significant new listings and investment will depend on the final rules and how easily companies and investors can participate.
