Nigeria’s struggle with high initial public offering (IPO) and listing costs has become a quiet but persistent barrier to deepening its capital market.
For many companies, especially small and mid-sized firms, the expense of going public often outweighs the benefits, keeping them locked out of the formal market and limiting the pool of investable assets.
With its stock market capitalisation hitting above N100 trillion recently, the NGX sits comfortably among Africa’s top-tier exchanges, yet its pricing structure tells a different story.
A report, ‘Africa Capital Markets Report 2025’, released recently by the Organisation for Economic Co-operation and Development (OECD), pointed to these exchange-imposed charges.
Pinnacle Daily reports that the OECD is a global group that provides data and advice to help governments make better policies.
According to its report, the Nigerian capital market ranked 4th among the 10 best-performing markets in Africa in terms of market capitalisation, capital raised, and liquidity as of the end of 2024.
However, the country ranks among the most expensive markets in its peer group, a reality that is prompting renewed debate over how to make the Nigerian Exchange Limited (NGX) more competitive and inclusive.
A closer look at listing fees highlights the scale of the challenge. It shows that for a $150 million IPO, Nigerian companies pay direct listing costs equivalent to 0.252 per cent of the offer value.
This is more than four times the cost on South Africa’s Johannesburg Stock Exchange, where comparable fees stand at 0.060 per cent.
The report highlighted South Africa as the most capitalised capital market in Africa, with $336 billion, representing 60 per cent of the region’s market capitalisation.
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“The combined initial and annual listing fees for a USD 150 million IPO2 on these exchanges are below 0.06% of the IPO proceeds.
“The Nigerian Exchange stands out with total costs amounting to about 0.25% of IPO value despite the use of a capped fee structure,” the report stated.
Pinnacle Daily can report that in Nigeria’s stock market, a “capped fee structure” means listing fees are based on a percentage of the money a company raises, but there is a fixed maximum limit. This stops fees from getting too high for very large listings.
The gap widens further when measured against North Africa and East Africa, with Egypt charging just 0.010 per cent and Kenya’s Nairobi Securities Exchange emerging as the cheapest option at 0.002 per cent.
On small-scale listings, the report shows that Nigeria offers a 0.267 per cent fee for a $15 million IPO; though marginally lower than South Africa’s 0.320 per cent, it remains far above Egypt’s 0.054 per cent and Kenya’s 0.020 per cent.
The report highlighted that Morocco is the second most capitalised capital market in Africa, with a $74 billion value, Egypt is third with $45 billion, and Nigeria is fourth with $33 billion.
The report noted that market analysts warn that the IPO and listing imposed charges represent only a fraction of the true cost of going public.
It stated, “Expenses related to legal services, sponsoring brokers, underwriting, regulatory filings and marketing typically amount to five to ten times the exchange fees.
“In many African markets, these additional costs can be even more constraining, as limited availability of local advisory and underwriting expertise, smaller deal sizes and lower market depth often translate into higher per-transaction costs compared to more developed markets.”
How Nigeria can reduce IPO and listing costs
According to the OECD report, the problem is not insurmountable, but with the right mix of policy interventions and structural reforms, Nigeria could significantly lower the cost of bringing companies to market.
It recommended that listing rules should be more flexible and based on a company’s size, explaining that this would make it easier and cheaper for small and medium-sized businesses to list on the stock market, instead of forcing them to meet the same costly requirements as large firms.
It stated that Nigeria needs stronger local advisers and underwriters, noting that at the moment, legal, underwriting and marketing costs are often five to ten times higher than exchange fees because firms rely heavily on foreign experts, stressing that developing local expertise would help cut these costs.
The OECD said Nigeria can lower costs by working more closely with other African markets, stating that the use of platforms such as the African Exchanges Linkage Project would allow exchanges to share resources and align rules, reducing both operating and cross-border listing expenses.
Another recommendation is improving and digitalising trading systems to reduce operating costs for exchanges and brokers, and over time, these savings could lead to lower fees for companies looking to list.
The report added that encouraging more competition among brokers would help bring prices down, noting that when only a few brokers dominate the market, fees remain high, but that more competition and simpler pricing would reduce the overall cost of going public.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X
