SEC Urges Policy Consistency As S&P Places Nigeria On 2027 Frontier Market Watchlist

The director-general of the Securities and Exchange Commission (SEC), Dr Emomotimi Agama, has identified policy consistency as the critical factor in Nigeria’s quest to regain Frontier Market status, following S&P Dow Jones’ decision to place the country on its 2027 Watchlist for possible reclassification.

In a strategy paper titled “Nigeria’s Path to Index Reclassification: A Unified Strategy on Policy Consistency and Operational Resilience,” Agama said the S&P DJI decision, alongside FTSE Russell’s ongoing Frontier Market review, presents Nigeria with its best opportunity in a decade to restore global investor confidence and attract increased foreign portfolio investment.

He stressed that Nigeria has moved beyond the stage of introducing reforms, noting that international index providers are now focused on the consistent implementation of existing policies and the ability of the country’s market infrastructure to perform reliably under both normal and stressed conditions.

“The reform programme is complete; the evidence programme now begins,” Agama said, emphasising that the priority should be demonstrating the effectiveness of reforms already implemented rather than unveiling new initiatives.

According to him, S&P DJI acknowledged improvements in Nigeria’s regulatory environment, transparency, enforcement and market integrity, but made it clear that the country’s assessment would depend on sustained policy implementation and operational resilience throughout the observation period extending through the rest of 2026.

Agama noted that FTSE Russell’s parallel review was partly prompted by Nigeria’s successful migration to a T+1 settlement cycle in June 2026, a development that places the country ahead of many frontiers and several emerging markets in settlement efficiency.

He explained that although S&P DJI and FTSE Russell use different assessment methodologies, both evaluate similar indicators, including foreign exchange repatriation, settlement efficiency, regulatory consistency, and the reliability of market infrastructure.

The SEC chief warned that policy reversals, discretionary regulatory actions, retroactive directives or restrictions on foreign exchange access could jeopardise Nigeria’s chances of securing Frontier Market classification.

He identified five pillars required to strengthen investor confidence and satisfy global index providers: a durable foreign exchange regime, consistent regulatory enforcement, avoidance of retroactive policy changes, coordination among fiscal, monetary and regulatory authorities, and predictable enforcement of investor rights through the judicial system.

On operational resilience, Agama said Nigeria must demonstrate sustained performance under its T+1 settlement framework, ensure efficient foreign exchange repatriation, maintain deep and liquid FX markets, guarantee resilient market infrastructure and sustain orderly trading throughout the review period.

To coordinate the process, the SEC has proposed establishing an Index Reclassification Steering Committee comprising the Commission, the Central Bank of Nigeria, the Federal Ministry of Finance, the Federal Inland Revenue Service, the Nigerian Exchange, the Central Securities Clearing System, and FMDQ.

The Commission also plans to publish a quarterly Reclassification Evidence Pack containing certified data on settlement performance, foreign exchange repatriation timelines, market liquidity, infrastructure resilience, regulatory enforcement and dispute resolution. The reports will be submitted to S&P DJI, FTSE Russell and MSCI as evidence of Nigeria’s progress.

Agama further disclosed that the SEC would engage global custodian banks ahead of the third-quarter 2026 survey to resolve operational concerns before they are reported to the index providers.

He cautioned against actions capable of undermining the review process, including foreign exchange restrictions during periods of market stress, uncoordinated fiscal or tax measures, infrastructure failures and negative feedback from global custodians.

According to the implementation timeline, the SEC plans to establish the steering committee and issue the first evidence report in the third quarter of 2026, followed by technical submissions to S&P DJI and FTSE Russell before year-end, with continuous engagement throughout the 2027 country classification review.

Agama expressed confidence that if the proposed framework is implemented faithfully, Nigeria’s return to Frontier Market status would be driven by “an unbroken, independently certified record of performance” rather than advocacy alone.