(REUTERS) -- Nigeria's bourse is to list its first exchange traded fund (ETF) on Monday, a South African gold-backed fund that will broaden the exchange's range of products beyond equities and bonds, the stock exchange said on Friday.

NewGold, originated by South Africa's Absa Bank Limited , has a primary listing in South Africa and before its Nigeria debut had one other listing on Botswana's bourse.

The fund will open on an initial offering of 1.096 billion naira ($6.76 million), split into 400,000 units, to test demand before any possible expansion into something bigger, a source at the stock exchange told Reuters.

You don't want to list a million units and find out that it's not trading. They (ABSA) are testing the waters with this and I am certain that this figure will go up based on the uptake, the source said, adding that ABSA plans to expand the ETF around Africa, including in Ghana.

ETFs track equity or derivative indexes or a commodity but trade like a stock on an exchange, giving investors exposure to the underlying assets but at a much lower cost and with more short-term flexibility.

Listing on the Nigerian bourse, sub-Saharan Africa's second-biggest, will increase liquidity for the security and help diversify the stock exchange away from the equities that currently dominate it, he said.

We are trying to deepen and widen the capital market. We want to provide different products not just plain vanilla, the source added.

I see a lot of EFTs being listed earlier next year. We already have an application to list another equity-based ETF next year by a local issuer and they want ... it by January.

Nigerian equities have touched 8-year lows in recent weeks, dragged down by banking and oil stocks, as foreign investors spurn frontier markets and domestic funds to buy bonds in search of better yields.  

The all-share index is down almost 20 percent so far this year from a gain of 19.67 percent achieved in 2011.

Regulators have been trying to diversify the bourse to position it as a regional trading hub rivaling South Africa.

The source at the stock exchange said some of the mutual funds in the country were considering converting their funds into listed ETFs.