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MSCI, a leading provider of global equity indexes, said it has formally added the Nigeria MSCI index to its review list for a potential reclassification to ‘Standalone Market Status’ during its 2017 Annual Market Classification Review in June next year.

In a statement released on Wednesday, the New York-based firm said it has, however, opted to temporarily retain Nigerian indexes as part of its Frontier Markets Index and continue to apply its ‘special treatment’ of Nigerian equities as announced in April this year. MSCI had issued a notice on April 8, 2016, in which it warned against a possible exclusion of Nigeria from its Frontier Markets Index. Subsequently, the index provider said some individual stocks that no longer met its criteria would be deleted from its indexes.   

In June, MSCI said it launched a consultation to remove Nigeria from the MSCI Frontier Market Indexes, which is tracked by $12 billion worth of assets, and reclassify Nigerian equities to “Standalone Market Status.” The reason for the move was the sharp decline in liquidity in the Nigerian foreign exchange market and stiff capital controls imposed by the Central Bank of Nigeria.

“MSCI continues to welcome feedback on the level of accessibility in Nigeria and will continue to monitor the situation,” the index provider said. “In the event of sudden deterioration of the market accessibility, MSCI may reclassify the MSCI Nigeria Indexes to Standalone status as soon as practicable.”

MSCI’s decision to review Nigeria’s status on its indexes comes after the CBN floated the naira in the interbank foreign exchange market in a bid to improve forex liquidity and secure the return of international investors.

“While MSCI noted the positive efforts by Nigerian authorities and the Central Bank of Nigeria to enhance the liquidity in the foreign exchange market through a number of initiatives, such as the adoption of a more flexible exchange rate, the situation still remains challenging,” the index provider said. “The consultation discussions revealed that despite low level of accessibility of the Nigerian market, the investment community recognizes that more time may be needed for Nigerian authorities to improve liquidity of the foreign exchange market.”

MSCI said it will actively monitor the developments on the Nigerian market over the following months and reassess the market classification of the MSCI Nigeria Index.

Ten Nigerian stocks are currently included in MSCI’s Frontier Market Index. They are: Nigerian Breweries, Nestle Nigeria, Guaranty Trust Bank, Dangote Cement, Zenith Bank, Forte Oil, Lafarge Africa, Ecobank Transnational, Seplat Petroleum, and Guinness Nigeria.