How to buy shares on the Nigerian Exchange (NGX)
To buy Nigerian shares you need a licensed stockbroker, a CSCS account and a CHN. How each step works and what to know before you invest.
The Nigerian Exchange (NGX) in Lagos is one of Africa's largest stock markets, listing banks, telecoms, cement, consumer goods and oil and gas companies. Investing in shares lets you own part of these businesses and share in their profits through dividends and, over time, a rising share price. It also comes with the risk that prices fall. This guide explains how to buy shares on the Nigerian Exchange, the accounts you need, how dividends are paid and what risks to understand first.
The accounts you need
You buy and sell through a stockbroker licensed by the Securities and Exchange Commission (SEC) and a dealing member of the NGX. When you open an account, the broker also opens your account with the Central Securities Clearing System (CSCS), the depository that holds your shares electronically. You receive a Clearing House Number (CHN), which links all your shareholdings to you, whichever broker you use.
To open an account you will usually need a valid ID, your Bank Verification Number (BVN), proof of address, a passport photo and your bank details. Many brokers now let you complete everything in an app. Check that your broker is registered with the SEC before sending money, and pay only into the broker's official company account.
How to buy shares on the NGX
Fund your trading account, then choose the shares, the quantity and your price. A limit order, which sets the highest price you will pay, protects you from sudden jumps, especially in shares that do not trade often. Each trade carries brokerage commission and regulatory fees, so very small, frequent trades can be expensive. Once the trade settles, the shares appear under your CHN, and you can confirm them with CSCS through its online portal or by requesting a statement.
Selling works in the same way. You instruct your broker to sell at a price you accept, and the proceeds are paid into your trading or bank account after settlement.
How dividends are paid
When a company declares a dividend, it is paid to shareholders on its register by a cut-off date, known as the qualification date. Dividends are paid into your bank account after withholding tax, so make sure your bank details are registered through the e-dividend mandate system, or payments can go unclaimed. Many Nigerians have unclaimed dividends from old shareholdings; registering your mandate with each company's registrar helps you recover them.
Understanding share prices and returns
Your return from shares comes from dividends plus any change in the share price. The dividend yield, which is the annual dividend divided by the share price, helps compare companies that pay income. A company with steady profits, a consistent dividend and manageable debt is usually a sounder long-term investment than one whose share price has simply risen fast.
Understand the risks
Share prices can be volatile, and in an economy with high inflation and a moving exchange rate, returns in naira can look large while still falling short in dollar terms. Some shares trade heavily; others rarely change hands. Invest only money you can leave for several years, spread it across companies and sectors, and research a company's results before buying. Treat social media tips and promises of quick profits with great caution; our guide on how to spot investment scams in Nigeria explains common tricks.
Shares or a fund?
If picking companies is not for you, equity mutual funds and exchange-traded funds listed on the NGX spread your money across many shares for a fee. They are a simple way to start investing with smaller amounts. For safer, shorter-term savings, see Treasury bills and money market funds.
Shares and inflation
Over long periods, shares in strong companies can help protect savings from inflation, because companies can raise prices and grow profits. That makes them a useful part of a long-term plan; see our guide on protecting your savings from inflation in Nigeria. Investing a fixed amount regularly, rather than all at once, smooths out the ups and downs.
Frequently asked questions
What is a CHN number?
A Clearing House Number from CSCS that links all your shareholdings to you.
What do I need to open a stockbroking account in Nigeria?
Usually a valid ID, your BVN, proof of address, a passport photo and bank details.
How do I avoid unclaimed dividends?
Register your bank details through the e-dividend mandate system.
Sources
This article is general information, not financial advice.