FTSE Russell, a subsidiary of the London Stock Exchange group and a provider of market benchmarks and analytics, has downgraded its classification of Nigeria from “frontier” to “unclassified” market in a move that could dent foreign inflows into Nigerian stock exchanges.

As of 18 September, Nigerian indices will no longer be represented in the FTSE Frontier Index Series, which includes benchmarks such as the FTSE Frontier 50 Index, the FTSE/JSE All Africa Index Series, and the FTSE Middle East and Africa Extended Index Series.

These indices are used by traders and investors around the world to help them track the performance of different markets. Financial products such as index funds and exchange-traded funds (ETFs) also track FTSE Russell benchmarks and therefore buy or sell stocks when they are added or removed from the indices.

FTSE Russell announced that it taken the decision to demote Nigeria to an “unclassified” market because of the country’s longstanding foreign exchange difficulties. Since 2020, foreign investors have found it increasingly difficult to repatriate capital from Nigeria because of capital controls and a shortage of US dollars.