By Chukwuma Umeorah
Nigeria’s capital market has been consistently identified as a stong instrument in achieving President Bola Tinubu’s vision of a $1 trillion economy by 2030. Stakeholders across the nation’s financial sector continue to advocate for innovative strategies to deepen the market and enhance its effectiveness in actualising this ambitious goal.
At a recent industry gathering, thought leaders underscored the imperative for Nigeria to take proactive steps in harnessing the opportunities presented by the African Continental Free Trade Area (AfCFTA) while accelerating the listing of fintech companies on the nation’s capital market.
These insights formed the fulcrum of discussions during a forum with financial journalists, where the Chief Executive Officer of Marble Capital, Akeem Oyewale, and the Director General of the Securities and Exchange Commission (SEC), Emomotimi Agama, represented by the Head of the Lagos Zonal Office, John Briggs, highlighted the country’s readiness to exploit the vast economic potential within the African continent and the crucial role of the capital market in driving sustainable growth.
AfCFTA, a landmark free trade agreement, seeks to enhance intra-African trade and elevate the continent’s global trading position by fostering a single market for goods and services. Stakeholders argue that its successful implementation could significantly bolster Nigeria’s economic prospects, provided the capital market is effectively leveraged to support cross-border trade and investments.
AfCFTA and regional market integration
Central to the discussions was the Pan-African Payment and Settlement System (PAPSS), a groundbreaking initiative under AfCFTA aimed at simplifying cross-border trade across African countries.
Oyewale described PAPSS as a transformative tool that allows settlements in local currencies, eliminating reliance on international currencies like the dollar or euro.
“With PAPSS, you can trade and settle transactions across the continent in real-time using your local currency. This initiative solves the long-standing problem of inter-African trading of stocks, bonds, and other instruments,” he explained.
However, he cautioned that Nigeria risks losing out to other nations, such as Ghana, which has made significant progress in adopting the system. “Our regulators and market players must act swiftly to ensure Nigeria takes the lead in leveraging PAPSS. We need to enable schemes that allow cross-market trading and test its effectiveness to address potential challenges,” Oyewale urged.
“The potential is huge, but we need to actively test and resolve any issues. Otherwise, other countries will surpass us in exploiting these opportunities,” he warned.
Enhancing fintech participation in the capital market
Oyewale noted that platforms like PiggyVest and Cowrywise had successfully attracted younger demographics to the financial markets through simplified fixed income and equity investments.
He emphasiased the importance of integrating fintech companies into the capital market to expand its depth and appeal. However, he clarified that intermediaries like PiggyVest and Cowrywise, while innovative, were not yet positioned for listing and called for larger fintech players like Paystack, Flutterwave, and Moniepoint to consider listing on the Nigerian Exchange.
“These companies are revolutionising financial services and represent the next level of growth for the market,” he stated. “Their listing could unlock significant value and deepen market participation.”
Briggs echoed these sentiments, noting that regulatory reforms were underway to accommodate fintech listings. “The Commission has been making rules, and once the Investment and Securities Bill (ISB) 2024 is passed, there will be room for fintech operators to list in the market. Rule-making is critical because, without the necessary framework, these companies cannot be listed,” he explained.
Addressing infrastructure gaps through capital market
The discussions also highlighted the potential of the capital market to address Nigeria’s infrastructure deficit. Briggs pointed out that states and subnational governments can raise funds through various instruments such as; bonds, sukuk, and infrastructure funds, provided they meet transparency and accountability requirements.
“The issue is that many states are reluctant to submit their financials, which is a prerequisite for accessing the market. This lack of accountability is holding back infrastructure development,” Briggs lamented. He encouraged journalists to educate state governments on the benefits of leveraging the capital market for developmental projects.
He added that a significant pathway to economic transformation lies in financing critical national projects.
“Nigeria has already demonstrated how the capital market can fund these needs. For example, the federal government has raised significant capital by issuing six Sukuk to fund road projects across the six geopolitical zones. This innovative funding approach reduced the reliance on external borrowing while driving job creation, improved logistics, and regional integration.
“The issuance of green bonds has further cemented the role of the capital market in supporting Nigeria’s transition to a low-carbon economy, addressing both infrastructure and environmental sustainability”, he added.
Briggs noted that beyond government financing, the capital market was a vital enabler of private sector growth as companies in Nigeria have utilised the market to raise capital, expand operations, and compete globally.
“A prime example is MTN Nigeria, whose public offering in 2021 attracted significant local investor participation, broadening its shareholder base while showcasing the strength of our market.
“Additionally, the listing of firms which inclded; Dangote Cement and BUA Group underscores how the capital market supports industrial growth and job creation”.
Advancing market efficiency
SEC also reiterated its commitment to enhancing market efficiency through initiatives like the transition to a T+1 settlement cycle, which would significantly speed up transaction settlements. While the Central Securities Clearing System (CSCS) is prepared for this shift, Briggs noted that market functionaries like custodians were calling for a phased approach to ensure seamless operations.
“The transition from T+2 to T+1 is crucial for improving market efficiency, but it requires careful planning to avoid reconciliation issues,” he warned.
Unlocking Nigeria’s economic potential
Both speakers emphasised that Nigeria’s capital market hold the key to unlocking the country’s economic potential, including achieving its $1 trillion economy target. Oyewale and Briggs stressed that with greater innovation, regional collaboration, and transparency, Nigeria can position itself as a leader in Africa’s financial ecosystem. “Nigeria has all the tools to succeed, but it requires collective action from regulators, market players, and government institutions to maximise the opportunities available,” they affirmed.
