Nigeria T+1 Settlement Stirs Foreign Capital Concerns
Intelligence Summary
Nigeria's new T+1 stock settlement cycle, while fast, demands pre-funding, deterring foreign investors and risking its FTSE Frontier Market status.
The Nigerian Exchange has successfully adopted a T+1 stock settlement cycle, making it Africa's fastest. This operational upgrade, however, now requires pre-funding for all trades.
This mandatory pre-funding is proving problematic for foreign investors, who are balking at the new liquidity demands. This friction risks deterring international capital inflows and directly jeopardizes Nigeria's recent, hard-won FTSE Russell Frontier Market reclassification, which aimed to boost foreign investment.
Investors should closely watch for any policy adjustments or exemptions concerning foreign investors' pre-funding requirements. The ultimate decision on Nigeria's FTSE Russell status will be critical, as it dictates the country's visibility and attractiveness to a broader pool of institutional funds.
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