Tech IPOs: The Key to Unlocking Nigeria’s Stock Market Potential

In developed economies, technology companies dominate stock exchanges, serving as the backbone of innovation and economic growth. For example, in the United States, tech giants like Apple, Microsoft, Alphabet, and Amazon contribute nearly 47% of the S&P 500’s total market capitalization. No clearer example can be seen than the NASDAQ, where technology companies contribute over 50% of the market capitalization. In Japan, a country that prides itself on innovation, technology companies contribute around 35% of the market capitalization. All top five stock exchange markets have significant contributions from technology companies. Their influence has propelled the U.S. stock market into a global leader, with technology acting as the engine of growth.

Meanwhile, in Nigeria, the story is vastly different. The Nigerian Exchange Group (NGX) remains heavily reliant on traditional sectors, with financial services and Dangote’s business empire—including Dangote Cement, which alone accounts for over 20% of the NGX’s market capitalization, according to the Nigerian Exchange Group (NGX) report—dominating the market with less than 25% of the group shares publicly traded.

While the NGX’s total market capitalization hovers around ₦64.5 trillion (about 41 billion USD), as reported by the NGX in January 2025, the ICT sector is only beginning to assert its presence, majorly driven by telecommunication giants MTN and Airtel, which contribute 15% of the stock market capitalization. Yet, there is a missed opportunity: Nigeria is home to a burgeoning tech industry, with multiple startups now achieving unicorn status, boasting valuations exceeding $1 billion. Companies like Flutterwave, Interswitch, and Opay represent a new wave of economic potential, but they remain largely outside the NGX.

Nigeria’s tech ecosystem has made headlines in recent years, with fintech leading the charge. As of January 2025, at least five Nigerian technology companies have a valuation of over a billion USD.

Flutterwave, a digital payments company, is valued at over $3 billion. Interswitch, a pioneer in electronic payments, is estimated at $1 billion, while Opay’s valuation exceeds $2 billion. These firms are emblematic of Nigeria’s digital transformation and have proven their ability to scale globally. If just these three companies were to list on the NGX, they could collectively add several trillion naira to the market’s capitalization, potentially increasing it by as much as 10-15%, based on estimates derived from NGX sector reports and market trends.

To put this into context, if Flutterwave, with its estimated $3 billion valuation, were to list on the Nigerian stock market, it would be the fourth-largest company, increasing the market capitalization by between 4% to 7%, making it larger than any current financial services company listed on the Nigerian market.

Currently, Nigeria’s tech startups rely heavily on venture capital (VC) funding, which often comes from international investors. While this has enabled rapid growth, it also means that ownership and profits are largely concentrated outside Nigeria. Initial Public Offerings (IPOs) on the NGX offer a viable alternative. Companies that have reached profitability—such as Interswitch—could raise substantial funds locally through IPOs, reducing their reliance on foreign capital. Nigeria-led companies such as Paystack might have avoided selling to Stripe, instead raising funds for their international expansion and possibly competing with global payment companies. Listing on the NGX would also allow Nigerians to own shares in these companies, ensuring that the wealth created by the tech sector remains within the country.

This approach would strengthen the connection between these firms and the local economy, turning Nigeria’s tech success stories into national achievements.

As of 2024, the ICT sector’s valuation in the NGX stood at ₦10 trillion, representing approximately 15% of the market, according to NGX sectoral analysis. This figure, driven largely by companies like MTN Nigeria and Airtel Africa, underscores the potential for further growth. However, a significant gap remains. Most of Nigeria’s tech unicorns are yet to go public, limiting the sector’s full contribution to the NGX.

For context, the U.S. stock market’s technology sector reached a valuation of over $15 trillion in 2024, demonstrating the transformative power of tech IPOs. If Nigerian unicorns were to follow suit and list locally, the ICT sector could rival financial services as the leading driver of market growth.

To unlock this potential, Nigeria must address key challenges. The regulatory environment should be streamlined to encourage tech IPOs, ensuring clarity and reducing listing costs. Additionally, education campaigns could promote retail investor participation, making the stock market accessible to a broader segment of the population. The potential is evident in the U.S., where in 2021, retail investors comprised 25% of total equities trading volume, nearly double the percentage reported a decade prior. Policymakers should also consider offering incentives, such as tax breaks or reduced listing fees, for tech companies that choose to list on the NGX. These measures would make local IPOs more attractive than raising funds abroad or remaining private.

The decision to go public on the NGX is more than a financial one; it’s a patriotic choice. By listing locally, Nigerian tech companies can ensure that their success stories remain Nigerian. Ownership would shift from a small group of foreign VCs to a broader base of Nigerian investors, fostering national pride and economic inclusion. Moreover, IPOs would provide these companies with the capital needed to scale further while demonstrating transparency and governance, boosting investor confidence. They would also pave the way for future startups, creating a virtuous cycle of innovation, investment, and growth.

Tech IPOs have the potential to transform the Nigerian stock market, much like they have in developed economies. By embracing the power of local listings, Nigeria’s tech giants can drive economic growth, diversify the NGX, and empower citizens to share in the nation’s digital transformation. The time is ripe for Nigeria to harness the full potential of its tech sector and cement its position as a leader in Africa’s economic renaissance.