Pure Direct Listing Will Cushion Nigeria’s 1990s Decade of Banking Innovation for Tech Startups

A new generation of Nigerian companies are emerging; it is a continuum. We had an amazing decade in the early 1990s when some of the finest banking institutions in Nigeria today were founded. In the 2020s, a new generation of companies will be ready with fierce competitive power to redesign the architecture of the economic system. The 1990s belonged to the banks, 2000s gave us voice telephony, and 2010s is providing mobile internet at scale.

The decade of the 2020s will unleash digital application utility where many opportunities will fuse across sectors in our economy. I have noted that 2022 will be the inflection point as immersive connectivity opens a new dawn in Nigeria. Yes, from mobility to agtech to edutech, new species of companies will emerge. But for them to rise, a clear path for exit for financiers and investors must be provided. The Nigerian Stock Exchange has an opportunity to make that future happen. I have proposed Pure Direct Listing (different from NSE’s current direct listing) as an additional option for going public especially for tech companies in the nation.

Pure Direct Listing is simply doing an IPO without underwriters. With this process, the companies list and sell directly to investors without any need for underwriters. That will remove the burden of sourcing underwriters which complicates the whole process. While there is a risk to retail investors, I am confident that in this internet era with massively degraded information asymmetry, we can push these companies to disclose in ways that analysts and investors can independently verify their fundamentals. 

Today, there is another way we can even get these investors to keep our companies in Nigeria or take them public in the Nigerian bourse. One way is to move into pure direct listing in the Nigerian Stock Exchange (NSE) [Please note that the Direct Listing as currently done in NSE is not equivalent to a direct-listed IPO in my context. The NSE one is largely for dual-listing where a company can directly list if it is already listed somewhere else. To differentiate, I have called the one designed for IPOs and new companies Pure Direct Listing.]

In the past, I have listed ways to deepen the Nigerian Stock Exchange liquidity paralysis especially in the technology sector.

Nigerian Stock Exchange Should Adopt Pure Direct Listing for IPOs

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