NGX looks to boost investor confidence in capital markets

Onome Amuge

Temi Popoola, group managing director and chief executive officer-designate, Nigerian Exchange Group Plc (NGX), has expressed the vision to increase investor participation in the Nigerian capital market by bridging the gap between the millions of bank accounts in the country and the current number of investors in the market.

Popoola shared the vision at the recent working group committee meeting of the World Federation of Exchanges (WFE), hosted by Deutsche Boerse in Frankfurt, Germany. The CEO-designate of the NGX highlighted the need to utilise technology and financial inclusion to increase investor participation in the Nigerian capital market.

“We recognise the stark contrast between the investors currently engaged in the capital market and the vast potential represented by the 65 million banking accounts in Nigeria. Our vision is to bridge this divide, onboarding millions into the capital market and fostering financial inclusion on an unprecedented scale,” he said.

On the topic of attracting retail investors to the market, Popoola noted that some of the challenges including a difficult business environment, limited access to capital, and low liquidity in the markets being faced in Nigeria are similar to those of other emerging markets. He pointed out that other CEOs from exchanges such as the Nairobi Stock Exchange in Kenya and the Egyptian Exchange have echoed these challenges, pointing to a global phenomenon. 

As part of his address, Popoola identified the high interest rate environment in the United States as a major contributor to the localisation of capital within the country. He noted that the lack of capital outflow has had a negative impact on emerging markets such as Nigeria, which have become starved of the funding they need to grow and develop. Popoola also pointed to the impact of global headwinds on investors’ risk appetite and their willingness to invest in emerging markets.

“After navigating a challenging eight years with the previous administration, we now find ourselves under a more pro-market leadership. This shift positions NGX for renewed growth and resilience in the evolving economic landscape,” he said. Popoola emphasised the importance of collaboration between exchanges and governments to enhance listing incentives. He cited as an example the efforts of the Nigerian Exchange Group to collaborate with the government to prioritise listed companies in government procurement processes. This initiative is part of a broader strategy to incentivise companies to list on the exchange and create a more attractive environment for investors. Popoola believes that such measures can help to increase the liquidity and vibrancy of the market.

Popoola stated that the NGX plans to work with the Securities and Exchange Commission (SEC) to review and align its listing rules with those of major markets such as London.

He also outlined the exchange’s plans to deepen data revenue generation and engage with market infrastructure stakeholders, including central counterparty clearinghouses (CCPs) and central securities depositories (CSDs). He explained that the goal of these efforts is to strengthen the agility of the exchange and facilitate the efficient flow of data.