The increasing pace of voluntary delistings from the Nigerian Exchange Limited (NGX) has raised concerns among shareholders, who are now demanding urgent policy and regulatory interventions to halt the trend and safeguard market stability.
Recent market developments show that MRS Oil Plc has finalized its plans to exit the NGX, representing another major departure from the local bourse.
The oil firm, previously valued at about N60 billion in market capitalization, secured shareholder approval to migrate its shares to the NASD OTC Securities Exchange.
The move comes amid declining share performance and operating headwinds.
Shareholder groups are now attributing the wave of exits to what they describe as persistent structural weaknesses within Nigeria’s business environment.
According to them, macroeconomic instability, foreign exchange volatility, and rising compliance costs have combined to erode the attractiveness of the country’s main equities market.
Moses Igbrude, President of the Independent Shareholders Association of Nigeria (ISAN), noted that the market is witnessing a systematic erosion of publicly listed companies, which risks undermining the ability of the NGX to support long-term capital formation.
He identified regulatory burdens, currency instability, and weak investor incentives as key reasons behind the exits.
“The rising number of delistings is alarming and signals a deeper confidence crisis in the Nigerian capital market,” Igbrude said. “If these challenges persist, we expect more firms to seek alternative platforms or go private entirely.”
In addition to MRS Oil, several companies including CAP Plc and UACN have recently initiated or completed exit processes from the NGX.
Available data indicates that more than 20 firms have left the official market in the last decade, with 2024 witnessing a fresh round of notifications from companies planning similar moves.
Market participants highlight that the regulatory framework has failed to adapt to current economic realities, forcing firms to weigh the costs of remaining listed against the benefits.
The rising compliance burden, involving multiple layers of reporting, corporate governance mandates, and disclosure requirements, has become a disincentive for many firms.
Independent investors have also pointed to foreign exchange instability and inflation as major deterrents for companies with dollar-linked obligations.
The combined effect of naira depreciation and increasing operational costs has further tightened margins for firms listed on the exchange.
Amaechi Egbo, an active retail investor, explained that the capital market is losing its competitive edge as companies consider OTC markets more flexible and cost-effective.
He urged the Securities and Exchange Commission (SEC) and policymakers to initiate reforms focused on reducing regulatory costs, improving market liquidity, and stabilizing the macroeconomic environment.
“Without immediate reforms, we risk shrinking the pool of investible companies, which will ultimately affect both local and foreign investor participation,” Egbo stated.
Analysts also warn that the continued reduction in listed firms could limit the exchange’s role in capital mobilization, restricting access to funds for sectors critical to Nigeria’s economic growth.
Stakeholders are calling on the Federal Government, SEC, and NGX to collaborate on new incentive structures, including tax relief, streamlined compliance requirements, and policies targeted at retaining and attracting companies to the official market.
The growing trend of voluntary exits, if unchecked, threatens to weaken market confidence and reduce the ability of Nigeria’s capital market to serve its core purpose of supporting business expansion and economic development.
