NGX Liquidity Paradox: The Market Is Back. Where Are the Buyers?

At 10:07 on a Tuesday morning, Kola Balogun owned ₦20 million of shares.

At 10:09, he discovered that owning ₦20 million of shares and having ₦20 million were not quite the same thing.

His broker's app remained cheerful throughout. The shares were there. The last price was there. The portfolio value was displayed to two decimal places, which is how computers communicate certainty.

Kola pressed sell.

Nothing happened.

Not nothing in the dramatic Nigerian sense. Nobody had vanished with the registrar. The exchange was open. His broker was answering the telephone. The company remained profitable. There were simply too few buyers near the price displayed on his screen to absorb what he wanted to sell.

He had discovered a peculiar form of wealth: money you can see but cannot quite reach.

Kola is fictional. The problem is not.

Take Geregu Power. At the 23 September close of ₦825.70, its 2.5 billion shares implied a market capitalisation of about ₦2.06 trillion. Yet across the seven completed sessions to 23 September, the median daily value traded was only about ₦2.4 million. A hypothetical ₦20 million holding is trivial beside a ₦2 trillion company, but more than eight times the value that changed hands on the median recent day. At 10% of that flow, exiting becomes a matter of months. This is an illustration, not a prediction. NGX supplies the underlying prices and volumes.

What exactly is the price?

The screen is not lying to Kola. It is answering a smaller question than he asked.

A last price tells us where the most recent willing buyer met the most recent willing seller. Market capitalisation then multiplies that marginal price by every share outstanding. In a deep market, this convention is mostly harmless. In a thin one, it can become rather theatrical.

If nobody crosses the spread, yesterday's close may simply remain. NGX also operates a roughly ±10% daily price limit, so a large gap between yesterday's price and the price needed to clear a large sell order cannot always be travelled in one session. The Exchange describes the central order book, market makers and price limits here.

As Oppenheimer reminds us, "Theory will take you only so far." The theoretical value of Kola's portfolio is one thing. The price real buyers will pay for his quantity is another.

That is price discovery with an asterisk.

The problem is not merely one sleepy stock

Some of it is structural.

BUA Foods reported 4.72% free float at June 2026. BUA Cement reported 2.31%. Both comply with NGX requirements because the absolute naira value of those freely held shares is large: about ₦797 billion for BUA Foods and ₦267 billion for BUA Cement at their respective reporting dates. (BUA Foods filing; BUA Cement filing)

That is a perfectly sensible way to prove that a float has monetary value. It is a less convincing way to prove that a market is liquid.

Then comes the useful complication. Geregu disclosed 18.14% free float at December 2025. PRESCO disclosed 33.66% at June 2026, yet PRESCO's share price remained exactly ₦2,045.30 across the seven completed sessions to 23 September while its median daily traded value was about ₦118 million. (Geregu filing; PRESCO filing)

So free float helps, but it does not summon buyers by decree.

The trading measure is a seven-session snapshot through 23 September, not a judgment on business quality.

The rebirth is real. The plumbing is behind it.

NGX has made real progress. Equity turnover rose from ₦3.58 trillion in 2023 to ₦5.59 trillion in 2024 and ₦5.96 trillion in 2025. Nigeria moved to T+1 settlement on 1 June 2026. FTSE Russell restored Nigeria to Frontier Market status from 21 September. (NGX turnover; SEC T+1 notice; FTSE restoration)

But capitalisation has outrun trading. Equity market cap rose from ₦62.76 trillion at end-2024 to ₦99.38 trillion at end-2025, around 58%. Turnover rose only about 7%.

The longer comparison is more uncomfortable. The AfDB, using World Bank data, puts Nigeria's 2024 stock-market turnover ratio at 2.84%, versus 25.78% in South Africa and 50.24% in Egypt. Nigeria itself reached roughly 34.8% in 2008 under the World Bank series. (AfDB African Economic Outlook 2026)

The toll booth is not helping

NGX's published schedule includes a 0.30% SEC fee on purchases, 0.30% NGX and 0.30% CSCS fees on sales, stamp duty on both sides, brokerage of 0.75% to 1.35% on each side, plus VAT on specified charges. Seven Gates calculates an explicit round trip of roughly 2.74% to 4.03%, before the spread and before your own order moves the price. The schedule is here.

Wu-Tang supplied the shorter version: "Cash rules everything around me."

For context, the UK normally charges 0.5% SDRT on the purchase of UK shares. The current US SEC Section 31 assessment is $20.60 per $1 million of covered sales. The systems are not directly comparable, but the direction is obvious. A market seeking more trading should hesitate before attaching multiple tolls to the act of trading. (UK guidance; US SEC)

High friction encourages less turnover. Thin turnover widens spreads and weakens arbitrage. Investors then demand more return for the inconvenience of getting out. That raises the cost of equity for the companies the exchange is supposed to finance.

The plumbing problem eventually reaches the factory.

India and Tokyo have already left notes

India attacked concentrated ownership directly. Its rules imposed 25% continuous public shareholding for private listed companies, and SEBI said why: dispersed ownership supports a continuous market, investor liquidity and fair price discovery. That is close to a diagnosis of the NGX problem.

Tokyo adds a second test. Its Prime Market requires 35% tradable shares, at least ¥10 billion of tradable-share market capitalisation, and at least ¥20 million of average daily trading value. It asks both whether shares are public and whether anybody actually trades them. JPX criteria

Nigeria need not copy those thresholds. It should copy the logic.

For the largest companies, a meaningful percentage float and a minimum naira float should both apply. Continuing liquidity tests should sit beside listing tests. Market makers should have enforceable obligations on spread, size and quote presence. Institutional block trading needs depth. Securities lending and short selling can improve two-sided price discovery. Transaction costs should fall. And NGX company pages should publish what investors need in a bad week: 20-day and 60-day traded value, zero-trade days, typical spread, displayed depth and an estimate of how long a meaningful position might take to liquidate.

Nigeria's market revival is not imaginary. Faster settlement and renewed international classification matter. Rising turnover matters.

The next stage is to make the market deep enough for the prices on the screen to mean more than they currently do.

Kola's problem was never that he did not own the shares. He owned them perfectly.

He was merely learning that ownership and liquidity are two different assets.

Research note: Kola Balogun is a fictional composite used to explain market mechanics. Company prices, volumes and free-float disclosures are sourced from NGX and issuer filings. Seven-session liquidity calculations use completed sessions through 23 September 2026. Liquidity is not a judgment on the underlying quality of any named company, nor is this personal investment advice.