S&P Dow Jones Indices (S&P DJI) has placed Nigeria on its 2027 watchlist for a possible reclassification from a standalone market to a frontier market, citing improvements in the country’s regulatory environment.
Gatekeepers News reports that the move, announced in the firm’s 2026/2027 Country Classification Watchlist released on Wednesday, marks the first formal step toward a possible restoration of Nigeria’s frontier market status after its downgrade in 2023.
According to S&P DJI, the watchlist identifies capital markets where significant developments could result in a change in classification.
The index provider acknowledged that Nigeria has made notable progress in strengthening its regulatory framework, particularly in transparency, enforcement and market integrity.
“The Nigerian regulatory environment has modernized to improve transparency, enforcement, and market integrity,” S&P said.
“While these reforms are intended to support a structurally more accessible market, consistency in policy application and operational resilience are required for reclassification.”
S&P said it would continue monitoring developments throughout the remainder of 2026 before making a final decision during its 2027 annual country classification review.
“Consequently, S&P DJI places Nigeria on its 2027 Watchlist and will closely monitor developments for the remainder of 2026 and potentially consider Nigeria’s status for reclassification to frontier from standalone in conjunction with next year’s country classification review,” the firm added.
Nigeria was downgraded from frontier market to standalone market by S&P Dow Jones Indices in 2023 over persistent foreign exchange illiquidity and challenges associated with capital repatriation. The decision took effect in March 2024.
The latest watchlist announcement signals growing confidence in the country’s ongoing market reforms aimed at improving investor access and regulatory oversight.
The development comes weeks after global index provider FTSE Russell postponed a decision on Nigeria’s return to its Frontier Market Index, despite acknowledging the country’s extensive capital market reforms.
FTSE Russell expressed concerns that Nigeria’s transition to a T+1 settlement cycle could effectively make the market a prefunded one for foreign institutional investors, who may encounter operational difficulties completing foreign exchange conversion and settlement within one business day.
The firm subsequently deferred its decision, saying it would conduct a comprehensive assessment of the practical implications of the new settlement framework before announcing a final verdict by the end of August 2026.
However, Nigerian capital market regulators and stakeholders, including the Chartered Institute of Stockbrokers, have maintained that the country’s migration to T+1 settlement does not require investors to prefund transactions.
They argue that the Nigerian market continues to operate under the internationally recognised Delivery versus Payment (DvP) settlement framework and that although operational adjustments may be necessary, the shorter settlement cycle does not alter the settlement model or reduce accessibility for foreign investors.
