Nigeria’s FTSE return is just the opening act

Nigeria has won back a seat at the global investment table. But market players say the real prize is still out of reach.

FTSE Russell’s decision to return Nigeria to its Frontier Market Index from Sept. 21 is an important vote of confidence in the country’s efforts to restore market accessibility. After almost three years as an “Unclassified” market, Nigeria has cleared a hurdle that was less about the size of its economy than whether foreign investors could reliably move money in and, crucially, out.

But for investors, FTSE inclusion is more signal than catalyst.

The bigger prize, according to market participants, is convincing MSCI to reverse its decision to classify Nigeria as a Standalone Market. That would put the country back into a much deeper pool of global investment capital and could have a far more meaningful impact on foreign flows than its return to the FTSE Frontier index.

Nigeria’s problem has never been a shortage of reasons for investors to take a look. It has been the difficulty of getting them to commit capital at scale. Foreign-exchange shortages, delayed repatriation and unpredictable market access turned what should have been a liquidity risk into an investment risk.

FTSE’s decision suggests some of that damage is being repaired. The index provider said market participants reported that foreign-exchange queues had been cleared and that international institutional investors were no longer experiencing material delays in repatriating capital. Nigeria now meets the market-quality requirements for…