We told you so. Now, let us fix it before August. No FTSE, No MSCI.. Period

A few weeks ago, I wrote that Nigeria had dropped a Ferrari engine into a Peugeot 504 body and was wondering why the car would not win races.

I argued that T+1 was a fine destination arrived at by a reckless route, that we had compressed 2 settlement cycle changes into 8 months, and that the foreign investor, faced with a custodial chain that could not turn around an FX leg and an equity leg inside a single business day, would quietly be forced to prefund the market or walk away. I would genuinely have preferred to be wrong.

On 30 June, FTSE Russell placed Nigeria’s reclassification to Frontier Market status under further review.

Their stated reason is that the move to T+1 could make Nigeria a de facto prefunded market for international institutional investors, and that a requirement to prefund trades is a negative for the Settlement Cycle, or Delivery versus Payment, criterion. That is 1 of the 5 core Quality of Markets criteria that decide whether you sit inside the investable universe or outside it.

The argument I made in May is now the argument printed on FTSE Russell letterhead. There is no satisfaction in that. There is only the work that should have been done before any of it.

Sit with the irony, because it is almost surgical. In April, when FTSE confirmed the upgrade effective from the open on 21 September 2026, one of the things they specifically rewarded was the settlement cycle. We had moved from T+3 to T+2, and that alignment with global practice earned us a Pass on settlement efficiency. T+2 was an asset on the scorecard. We had the prize in hand.

Then, on 1 June, we kept running. We moved to T+1 and ran straight past the very thing that had earned us the grade. We did not fail a test we had never taken. We re-sat a paper we had already cleared, and we failed it.

The deeper problem is that T+1 is sold to the public as a risk reduction reform, and in a market with the right plumbing, it is exactly that. A shorter settlement window means less time for a counterparty to disappear, less open exposure, and a cleaner system. All true. But in our market the only way a foreign fund can be confident of settling on T+1 is to leave cash sitting in Lagos ahead of the trade.

Prefunding does not remove settlement risk. It relocates it. It lifts the risk off the system and parks it on the investor’s own balance sheet, denominated in naira, in a currency just out of intensive care, in a market where repatriation is still a memory before it is a guarantee. We made settlement faster and we made it riskier for the precise class of investor we were trying to court. That is the whole story in 1 sentence.

I do not need to build the rest of the case, because the tape has built it for me. The market is down more than 10 percent since the switch. Turnover is thinning. Dealers will tell you that clients are now closing their books before the bell, not because they have finished trading but because they are buying themselves operational headroom against a settlement machine they do not trust. That is not the behaviour of a deep and confident market. It is the behaviour of a market that has learned to flinch. I wrote that line in May. The flinch arrived on schedule.

Now to the part that should worry us beyond any single quarter, and the part that gives this piece its title. FTSE was the easy gate. Of the 3 doors we are trying to walk through, it is by some distance the most accommodating. If we cannot hold a Frontier classification that had already been granted to us, then the harder and frankly more valuable conversations, the ones about MSCI and about the JPMorgan GBI-EM, become academic.

Index inclusion is not a vanity ribbon to hang in the lobby of the Exchange. It is a cost of capital compression mechanism. It generates passive inflows, it deepens liquidity, it improves price discovery and it tells active allocators that the market has crossed a threshold of investability. Every unit of friction we add is a unit we pay back later, in the coupon we offer on the next sovereign bond and in the discount on the next landmark listing. No FTSE means a longer wait for MSCI. A longer wait for MSCI means the GBI-EM stays a slide in a strategy deck rather than a line in a term sheet.

So what now. I have no interest in saying we told you so and leaving it there, because being right about a problem you cannot fix is just a more articulate way of being stuck. The point of the earlier piece, and of this one, was never that T+1 is wrong as a destination.

It is that you do not demolish a working arrangement to prove you can build a faster one. The good news, and there is some, is that FTSE has not closed the door. They have asked for time and promised a verdict by the end of August. That window, sitting just ahead of the 21 September effective date, is a gift. It is a chance to hand in a better script.

A better script does not mean tearing up T+1 and pretending the last month did not happen. It means sequencing it the way serious markets do. You do not have to sell the house. You can lease a room. Carve out a workable pathway for foreign portfolio investors rather than forcing a single domestic clock onto participants whose operational day runs across 3 continents.

That can look like a prefunding optional model, an FX pre match or same day FX facility aligned to global custodian cut off times, an omnibus settlement structure, or simply allowing the foreign leg to settle on a longer cycle while the domestic market enjoys its T+1. Underneath all of it sits the real work, the work that should have come first: genuine depth in the FX market, credible hedging instruments so that an investor can price and cover currency risk, cut off times that actually speak to how global custodians operate, and a true Delivery versus Payment framework rather than a prefunding workaround dressed up as progress.

And then the part that costs nothing and would have prevented all of this. Talk to the people who move the money. A broad, genuine consultation with global custodians, foreign broker-dealers, fund administrators and the FPIs themselves would have surfaced every line of this critique within weeks, long before a single press release went out. That consultation did not happen, or if it did, its conclusions did not survive contact with the timeline. It can still happen now. Engagement has to be proper, and the plumbing behind the market has to be airtight, in that order.

The cruellest part is also the simplest. In April we passed the exam. On the first of June, we walked back into the hall and re-sat a paper we had already cleared, before we had done the reading. We have until the end of August to hand in better work. You do not have to sell the house. You can lease a room. But first, for the love of everything, fix the pipes.