Nigeria's government has been actively pursuing Flutterwave, its most valuable startup, to list on the Nigerian Exchange (NGX) since 2023. The government believes a high-profile initial public offering (IPO) could energize the country's capital markets and attract other startups to follow suit. However, several challenges, including Flutterwave's profitability and the NGX's ability to provide exit liquidity, threaten to derail the plan.

At its last public valuation of $3 billion, Flutterwave would be one of the most valuable companies on the NGX. However, unlike listed giants such as MTN Nigeria ($3.5 billion) and Dangote Cement ($5.4 billion), Flutterwave isn't profitable – a major hurdle given that the NGX's rules prevent loss-making companies from going public.

The government's push to list Flutterwave on the NGX dates back to September 2023, when CEO Olugbenga Agboola joined President Bola Tinubu and Minister of Communications and Digital Economy Bosun Tijani at the G20 summit in India. While the specifics of their discussions remain unclear, multiple sources told TechCabal that Nigeria has since intensified efforts to convince Flutterwave to list locally.

Last Friday, President Tinubu's special media adviser confirmed the push following a meeting between Tinubu and Agboola at the Presidential Villa. But Flutterwave has remained noncommittal, carefully sidestepping IPO discussions in its public statements.

Nigeria has successfully nudged companies onto the stock exchange before. In 2019, MTN's Nigerian subsidiary went public on the NGX after regulators reduced its $1.7 billion fine, paving the way for its listing. However, the NGX has long struggled to attract tech startups, and its dedicated board for them, launched in 2022, has seen little interest.

One major obstacle is the NGX's requirement for companies to be profitable before listing, which contradicts the growth-over-profitability approach of most venture-backed startups. Moreover, the NGX's market dynamics, dominated by investors who prefer dividends and stable cash flows, might struggle to provide the exit liquidity that global investors expect.

Nigeria's stock market has a total equity market cap of around $44 billion, with daily trading volumes below $15 million. A $3 billion Flutterwave IPO would represent 7% of the exchange's total value, raising serious questions about whether the NGX has the depth to absorb such a listing.

Global venture capitalists like Tiger Global and Avenir have poured millions into Flutterwave, expecting high-growth exits. But the NGX's limitations might force Flutterwave to consider alternative listing options, such as a dual listing on the NASDAQ and NGX, which would increase compliance costs and regulatory complexity.

Even if Flutterwave were willing, the broader market conditions are not encouraging. Stripe, one of the world's largest fintechs, has shelved its IPO plans, and investor appetite for fintech stocks has cooled since the end of the zero-interest rate era.

The NGX wants Flutterwave to be its poster child for tech listings, a success story that proves Nigeria can host billion-dollar startups. But if the exchange can't provide the liquidity that Flutterwave's investors need, the company's IPO will likely land elsewhere – if it happens at all.