The trends in the global financial markets is a wake-up call for those who manage the Nigerian economy. In Nigeria, inflation rate hit 26.72 percent in September, but this is a mere official figure. The naira has been devalued by almost 1000 percent. Exchange of the naira to dollar and other convertible currencies is always a sore point. Many Nigerian youths are in dire need of jobs while millions of Nigerians live below one dollar per day. The question that recurs like a decimal point is how did we get here?
It is not rocket science to say that inflation, international transactions, government policies, demand and supply of goods and services, speculation and expectations, generally shape every financial market. Our financial market has been integrated into the global market since the abrogation of the Exchange Control Act of 1962 and its replacement with some investment Acts.
A global leader in digital transformation, Capgemini Consulting, identified four basic trends that impact the global capital markets, particularly the intermediary firms: Increased regulatory reforms; Effects of dark pool trading on the total volumes of trading; Likelihood of increased consolidation in the financial intermediary industry; and Focus on technology upgrades by the firms. Despite the myriad headwinds plaguing the Nigerian economy and the financial market, regulators and operators have been working tirelessly to further integrate the market. Expectation is high that the Bola Tinubu administration shall revive the economy. Nigeria has never been bereft of ideas, but implementation.
I had some conversation with one of the most cerebral chief executive officers (CEO) in the Nigerian financial market recently. He has just returned from Ghana where he made a brilliant presentation to a distinguished audience on how African countries can address some impediments to trade among themselves. He was particularly perturbed about the needless devaluation of the naira without any justifiable reason. He lamented that Nigeria was neither in recession nor depression.
“Ghana’s economy went bankrupt and the country defaulted on its bond obligations. Mali was plunged into coup while Ukraine has continued to slug it out with Russia on the battlefield. The currency of each country has not suffered a huge devaluation. Why did Nigeria which has no similar challenge devalue its currency with reckless abandon?
“I was in Ghana recently, it was sad that I had to convert the naira to dollars before I could change it to Cedi. Ghana imports many things, including cow and rice. While the members of European Union take joint position on trade, African countries operate in silos. The minimum that the Nigerian government should do to strengthen trade relationships among African countries is to review tariffs at the Nigerian port. Our tariffs must be competitive with that of the global community. This will significantly minimize smuggling, and other vices that are plaguing import and export trade. Government should liberalize export and import trade.
“Other countries protect their economy by not allowing foreign investors to own 100 percent stake in a company. But Nigeria had at a period in the past opened up its economy to foreigners by allowing them to own 100 percent in a company registered in Nigeria. No country allows such, hence the Nigerian law has become trite. It has become necessary to protect the Nigerian economy from capital flight,” said the CEO.
The issues raised by the CEO are expected to be addressed at the 2023 Annual Conference of Chartered Institute of Stockbrokers (CIS) in Abeokuta, an ancient city and capital of Ogun State from Thursday, November 9 to Friday, November 10. The Conference Theme is: “Appraising New Trends in the Global Capital Market: Localizing the Benefits.” The Conference is expected to examine the merit and drawbacks of unbanning access to forex on 43 items, the government’s current strategy to address forex scarcity and implications of adoption of a unified exchange rate in Nigeria at the moment.
The Conference, which will involve investiture of the Fellows and induction of new Associates is endorsed by the Ogun State government. Participants at the Conference, including top government officials will direct searchlight on critical issues such as “Pathways to rejuvenate the Nigerian Economy through the Capital Market”; “Capital Market Operations Amidst Disruptive Technologies”; “Enhancing the Nigerian Capital Market: An in-depth Exploration of the Functions and Impact of Securities Exchanges”; and “Operating with CIS Certification in a Diverse Economy”. The choice of Abeokuta as the venue for the Conference, is intentional. Stockbrokers understand how an environment can stimulate creativity and let ideas flow naturally.
Abeokuta, renowned for commerce, has become a metaphor for Agenda Setting for Nigeria’s economic revival. Individual stockbrokers and their corporate members – Association of Securities Dealing Houses of Nigeria (ASHON), and other participants will speak to the possibilities of a new model of economic turnaround.
The Conference will open up conversations that will form a blueprint for the federal government in its bid to reform the Nigerian financial market.
