Nigeria built a stock market board for tech companies. No one has listed yet

Nigeria created a stock market board specifically for technology companies. Three years later, there is still not a single company listed on it. The NGX Technology Board was launched to give technology companies another way to raise money and allow investors to buy shares in some of Nigeria's growing tech businesses. But Nigerian startups have continued to raise money privately. Companies such as Flutterwave, Moniepoint, Interswitch and OPay have attracted major investors without using the local stock market. That raises the question of why more technology companies are not looking at the NGX.

Private money is still easier

For a technology company, raising another funding round can be easier than preparing for an IPO. Private investors can put money into a company without it having to deal with the reporting requirements that come with being publicly listed. Founders also have more control over who owns part of the business. A listing changes that. A public company has to regularly disclose financial information and answer to shareholders. Its share price is also available for everyone to see. For a startup that is still growing or spending heavily on expansion, that can be difficult.

Valuations are another problem

Many African startups raised money at high valuations during the funding boom of the past few years. The market has changed since then. Investors have become more careful about putting money into companies that are growing quickly but are not making profits. A public listing would put those valuations to a much tougher test. Once a company is listed, investors decide what its shares are worth. A technology company that raised money privately at a valuation of $1 billion, for example, could find that public investors are not willing to value it at the same level. That is a risk existing shareholders and founders have to consider.

Not every big startup is ready

Nigeria has plenty of technology companies that could eventually become candidates for a public listing. But being a large startup does not mean the business is ready for the stock market. Some are still expanding into new countries. Others are still spending heavily on customer acquisition, technology and staff. Some have also not reached consistent profitability. Public investors can buy shares in loss-making companies, but they usually want a clear view of how the business makes money and where it is heading. That information is easier to provide when a company has several years of financial results behind it.

The NGX needs investors too

Getting technology companies to list is only one part of the equation. The companies also need people willing to buy their shares. The Nigerian Exchange already has a large pool of investors, but most of the companies listed on it come from traditional sectors. Banks, telecoms, consumer goods companies and industrial businesses make up much of the market. A technology company would be different. Its value could depend more on software, users, transaction volumes or intellectual property than factories, equipment or physical assets. Investors would have to get comfortable with that type of business.

Three years without a listing

The NGX Technology Board was supposed to give Nigeria's technology companies a route into the public market. So far, the companies have not taken it. That does not mean there are no companies capable of listing. It means the private market is still working well enough for most of them. As some of Nigeria's biggest startups get older and their early investors look for ways to cash out, that could change. But for now, the technology board remains empty. Nigeria has the startups. It has the stock market. It is still waiting for the first tech company to put the two together.