Dangote Refinery’s IPO as catalyst for capital market growth

Across the Atlantic, similar transformative listings are capturing global attention. SpaceX, Elon Musk’s pioneering aerospace company, is preparing for a potential mid-2026 IPO targeting a valuation of up to $1.5 trillion - one of the largest in U.S. history. This move highlights how iconic, high-growth enterprises can unlock massive capital through public markets, fuelling innovation and expansion. Nigeria can draw parallels: just as SpaceX’s listing would democratise access to space technology, the Dangote Refinery IPO could open opportunities in Africa’s energy sector, driving economic diversification and job creation. These landmark offerings underscore a broader opportunity for Nigeria. Public listings provide companies with access to long-term capital, enhanced corporate governance, and greater visibility. For industries ranging from manufacturing to technology and agriculture, going public can fuel expansion without relying solely on bank lending or private equity.

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We must also encourage public sector divestments. Strategic partial privatisation of state-owned enterprises - drawing lessons from successful models globally - could inject fresh capital, improve efficiency, and broaden public participation in national assets. This would deepen the market while aligning with fiscal reform goals. To fully realise this potential, regulatory enhancements are essential. The 10 per cent daily price movement limits on individual equities - adjusted to their current level around 2012, from a prior five per cent ceiling, as part of efforts to balance volatility control with greater price discovery amid the introduction of market making - were appropriate during earlier phases of market development marked by higher uncertainty. The complementary market-wide index circuit breaker, introduced in 2016 during a period of sharp equity declines, further aimed to prevent panic-driven swings.

However, today’s market conditions have significantly improved, with deeper liquidity, record capitalisation, and more stable macroeconomic fundamentals. These longstanding limits can now constrain efficient price discovery, delay adjustments to new information, and sometimes reduce trading volumes. In contrast, the Johannesburg Stock Exchange (JSE) - Africa’s largest and most mature capital market - does not impose rigid daily percentage caps like the NGX’s 10 per cent rule.

Instead, the JSE employs sophisticated static price bands, typically around five to 10 per cent and tighter dynamic bands, around one to two per cent relative to reference prices. Breaches trigger temporary volatility auctions rather than outright halts or daily caps, allowing stocks to achieve fuller price movements in a single session while managing intra-day volatility. This flexible approach supports greater liquidity and attracts international investors in a market with far higher daily turnover.

Relaxing or removing the NGX’s 10 per cent limits - perhaps on a tiered basis for Premium Board listings and other high-liquidity or large-cap stocks, drawing inspiration from the JSE model - would align us more closely with global and regional best practices, encouraging higher participation and attracting sophisticated investors seeking dynamic opportunities.

As Nigeria’s economy continues to stabilise and grow, the stage is set for the capital market to play a pivotal role. The Dangote Refinery listing, alongside international benchmarks like SpaceX, should inspire more private sector flotations, public divestments, and progressive rule reforms. By embracing these steps, we can build a deeper, more vibrant market that supports sustainable development and wealth creation for all Nigerians.

• Osadiaye, a Chartered Financial Analyst, writes from FirstCap