🍞 The House Always Wins

Hello,

This is Demilade,

Last week was a frenzy for all things Dangote’s refinery. This week we look at an unexpected winner from the Nigerian economy’s “eventful” end of Q3.
In addition to the IPO, 31 Nigerian stocks are now listed on London’s stock exchange FTSE Frontier Market Index. This means foreign investors who follow this index will need to allocate some of their investment to these stocks. The estimated inflows are said to be about 10% of the current trade value of the NGX this year.

And just yesterday, the CBN surprised analysts by cutting interest rates. The rate cut carries two benefits. First, interest rates are inversely correlated with the stock market, as lower interest rates force bond investors to seek returns elsewhere, including in stocks. Secondly, cutting interest rates is a sign that Nigeria’s inflation is indeed easing, i.e the reforms that have been felt in the capital markets are finally starting to get to the man on the street.

All of these things are tailwinds for the Nigerian Stock Exchange, and for the company behind it, NGX Plc. In this deep dive, we cover the NGX’s business and how Nigeria’s multi-year stock rally is reflecting on the company’s balance sheet.

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Enjoy!
Demilade

Three major events over the last seven days may have changed the shape of the Nigerian stock market. 

First, on 14 September, Aliko Dangote opened the initial public offering of Dangote Petroleum Refinery: 4.1 billion shares at ₦525 each. If fully subscribed, the offer raises about ₦2.15 trillion ($1.63 billion), and its promoters are billing it as the largest IPO in African history. Then on Monday, 21 September, Nigeria returned to FTSE Russell's Frontier Market index after three years outside it, with 31 Nigerian companies eligible for inclusion. And finally, on 22 September, the Central Bank of Nigeria cut its benchmark interest rate by 350 basis points, from 26.5% to 23%. Its biggest rate cut in years

Each story has been covered as good news for equity investors in Nigeria. But there is one company that benefits from all three at once: the Nigerian Exchange Group Plc, the company that owns the exchange.

You can think of NGX as a large event centre; it doesn’t care whose wedding it is or which guests have the best night. As long as there are weddings happening, it will continue to make money.  

For most of its history, the venue wasn't a business at all. The exchange opened in 1960 as the Lagos Stock Exchange, owned by its member stockbrokers and run as a not-for-profit. In 2021, the NSE changed its legal structure, turning a “members' club” into a company with shareholders, and the new NGX Group listed its own shares on its exchange.  

It was bad timing: Nigeria's dollar shortage meant foreign investors could buy Nigerian shares but could not reliably convert their naira back to dollars and send the money home. In September 2023, FTSE Russell removed Nigeria from its frontier indices. Forbes reported that the country's stocks were deleted from those indices at zero value. I.e completely written off. 

The repair started with the CBN's decision to float the naira and unify its exchange-rate windows in June 2023. The backlog of investors waiting to take money out of Nigeria cleared gradually. But this came at high micro and macroeconomic costs. The free float led to devaluation of the Naira, which affected the dollar market cap of Nigerian companies. A company that was worth $300 million saw its valuation drop to about $100 million overnight. It also affected the everyday Nigerian. In an import-dependent economy, the exchange rate determines prices of domestic goods. When the Naira devalues, these prices go up.

In 2024, the NGX had its lowest trading volume in dollar terms, at $3.8 billion in trades for the whole year, down from a high of $8.3 billion in 2017. However, the fundamentals behind the best companies had not changed, and savvy investors noticed. Really good companies were perceived to be trading at a discount and this led to a wave of investments, mergers and a steep repricing of the market.

From that low in 2024, the NGX All Share Index (value of all the stocks in the market combined)  grew by 51% in 2025, and is up 56.79% for 2026. The market's total value had grown from ₦99.94 trillion to ₦158.3 trillion. In dollar terms, that is a rise from about $72.65 billion to $115.69 billion. Trade value is also up to an all-time high of ₦9.8 billion. 

This steep increase, reflected in the NGX Group's numbers, By 2025 operating revenue by 2025 rise to ₦22.98 billion, from ₦5.78 billion in 2021, its first year as a company. And its share price has risen 8.5x from an all-time low of ₦15.30 in November 2021 to around ₦130 in early September 2026, according to Daba Finance.

In the first half of 2026, NGX Group reported revenue of ₦17.60 billion (about $13.3 million), up 118% on the same period last year, according to its unaudited results. Profit after tax rose 146% to ₦10.36 billion.

The money comes from three places:

There's one more feature of the business that is super important. An exchange is essentially a technology business. Its costs don't rise much when trading doubles. It uses the same systems, staff and buildings to handle twice the volume. That is why NGX Group's pre-tax profit rose 170% in the half-year while revenue rose 118%.

The FTSE return puts 31 Nigerian stocks into benchmarks that global funds use to decide where to invest: 10 large caps, 10 mid caps and 11 small caps. Six of them (Aradel Holdings, Dangote Cement, First HoldCo, GTCO, MTN Nigeria and Zenith Bank) also joined the much highly traded Frontier 50. One of the 31 is NGX Group itself, in the small-cap tier. The venue is now also a guest.

Not all the usual suspects made it to the list. BUA Cement and BUA Foods, two of the largest companies on the exchange, did not have enough shares in public hands to meet FTSE's free-float rules. Seplat Energy was left out because, under FTSE's nationality rules, its London listing counts as its “home” market. 

For the exchange, though, who gets on the list matters less than what happens next. Returning foreign funds trade, and every trade pays the toll.

How much money arrives depends on each stock's index weight. The first public factsheet showing Nigeria's weight is due in October. FTSE has attached no inflow figure to its decision, but some analysts' estimates exceed $800 million. That is almost 8% of the total transaction value of the NGX so far this year. 

One factor could make the flows even larger than expected. Vietnam, which carried nearly 30% of the Frontier index's weight as of March, is leaving it. Funds that sell Vietnam stocks will have to put that money somewhere else in the frontier universe, and Nigeria is now back as a viable option for them.

CBN cut rates by 350-basis-point cut reportedly the largest in its history. It also surprised the market: a Bloomberg survey found five of eight economists had expected no change. Headline inflation fell to 15.39% in August, its third consecutive monthly decline, according to the National Bureau of Statistics, which is the general rationale for the rate cuts.  The usual logic is straightforward. When interest rates fall, savings accounts and Treasury bills pay less, so investors seeking a return move some of that money into shares. More money in shares means more trading, and more trading means more fees for the exchange.

But CBN Governor Olayemi Cardoso said the cut should not be read as a change in the bank's policy stance. He described it as an operational realignment. The CBN's own figures show what he means. The CBN sets a band around its benchmark rate: a floor it pays banks for leaving spare cash with it, and a ceiling it charges them for short-term loans. In July, the band sat at 4.5 points below and 0.5 points above a 26.5% rate. Banks earned 22% on deposits and paid 27% to borrow. The new band sits at 3 points below and 0.5 points above 23%, so banks now earn 20% and pay 23.5%.

The rate banks earn on idle cash fell by two percentage points, not three and a half. The share of deposits banks must hold at the CBN is unchanged at 45%. The direction of travel is lower rates, but the move in reality is smaller than the headline number.

The Dangote refinery IPO is designed for scale at the bottom. The minimum subscription is 10 shares, or ₦5,250, and Dangote has said he wants to add 10 million retail investors to the shareholder register. The offer runs through about 55 approved channels, including bank apps, the NGX's own platform and fintechs such as Bamboo, Cowrywise, PiggyVest and even Moniepoint POS terminals.

The demand is REAL!  Bamboo told TechCabal it opened more than 236,000 new accounts in the week before the IPO, and 64% of them were funded and trading within that same week. Its previous best month, May, brought 172,000 sign-ups. On opening morning, both Bamboo and Cowrywise went down under the traffic.

Moniepoint then took the offer offline. Nigerians can now subscribe through Moniepoint's point-of-sale terminals in all 774 local government areas, up to 500 shares per transaction. Moniepoint MFB chief executive Babatunde Olofin said the aim was to reach market traders, artisans and first-time investors. It received a reported ₦1.5 trillion (over $1 billion)  in subscriptions within six hours of opening.

For the exchange, the IPO pays twice. The first payment is the cover charge: listing fees on a company that will be valued at $49 billion, making it larger than any company currently on the exchange. The second payment comes later and lasts longer. Every IPO subscriber becomes a shareholder when the refinery lists in November, and every refinery share that changes hands after that generates a transaction fee.

Dangote has also said his group will list every company it operates, including its fertiliser business, which is preparing for a 2028 IPO. For the NGX, that is a promise of future cover charges.

The IPO shares are about 3.3% of the refinery's enlarged share capital. Whether a float that small passes FTSE's screen, the same rule that kept BUA out, is a question for a future index review.

A business that earns 76% of its revenue from trading has earnings that move with the market. The same cost structure that made profits rise faster than revenue in 2026 works in reverse when volumes fall: the systems and staff stay, and the fees don't come in.

NGX Group's history shows this. In 2021, with the market quiet, its operating revenue fell 7%. In 2022, it grew 11%. The triple-digit growth of 2026 is a product of a record rally, not a permanent feature of the business.

Each of this week's tailwinds also carries a test.

One of the 31 index stocks is worth watching separately. Aradel Holdings was listed after Nigeria's 2023 exit, which makes it the only Frontier 50 member that frontier funds have never held through this index. With Seplat excluded, it is also the only Nigerian oil company in the Frontier 50. We will return to it in October, once the weights are public.

🏦 CBN cuts rates to 23%, but the real move is smaller than it looks. The Central Bank of Nigeria surprised markets by cutting the Monetary Policy Rate 350 basis points, from 26.5% to 23%. It is the largest single cut in the rate's modern history, and most economists had expected a hold. The headline flatters the move, though. Interbank rates had been trading near the 22% deposit floor rather than the official rate, and the corridor was narrowed at the same time, so the rate that actually priced the market fell by only 200 basis points. Governor Olayemi Cardoso called it an operational reset, not a change of stance. Inflation eased to 15.39% in August, the third straight monthly decline, so real rates stay among the highest in the world. Standard Chartered's Razia Khan said the corridor changes blunt the overall impact of the cut. Watch: whether bank lending rates follow, with 45% of commercial bank deposits still locked in reserve requirements.

📲 Moniepoint's IPO POS. Moniepoint has turned its POS agents into a sales channel for the Dangote Petroleum Refinery IPO. Retail investors can subscribe at agent tables across all 774 local government areas, or through the group's apps. It is the first time an offer of this size has been sold through agent-banking infrastructure in Nigeria. A customer can hand cash to an agent and walk away with a subscription and a printed receipt. First-time investors get a CSCS account opened during onboarding, and each transaction is capped at 500 shares, or ₦262,500 (about $200). The channel sidesteps the app outages that hit Bamboo and Cowrywise under first-hour demand, and it gives Moniepoint KYC-complete customers it may never have reached otherwise. Watch: whether a channel-level breakdown is published after the offer closes on 13 October, showing how far beyond the traditional market the IPO reached