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By Chinwendu Obienyi
The capital market plays a crucial role in providing financial resources for long term projects promoted by various entities, including governments, private institutions and corporates.
Consequently, an efficient capital market is also seen as an essential component for economic growth and prosperity.
With the hindsight of experience, analysts believe that the COVID-19 pandemic which struck in 2020, saw oil prices dropping sharply and translated to sectoral challenges especially in developing countries such as Nigeria.
That situation has left market operators as well as experts calling for bold reforms in the oil and gas, power and other crititical sectors to spur growth.
Owing to government’s policy somersaults from previous administrations, inflation, foreign investors exit as well as FX crisis reigned supreme for years, as investors still remained cautious especially as they are yet to recover fully from the 2008 market crash.
Already, there has been growing calls from regulators for multinationals to list on the nation’s bourse as a strategic step towards deepening it and engendering active participation of indigenous investors in the companies’ wealth creation agenda as well boosting liquidity and transparency in the market. All these were aimed towards returning confidence back to the market.
However, there is cause for investors to feel confident again as recent policy reforms taken by the new administration under President Bola Tinubu have had a positive impact on activities in Africa’s preferred exchange hub – Nigerian Exchange Limited (NGX).
Specifically, the removal of fuel subsidy and unifying Nigeria’s exchange rate as well as planned strategies to ensure investors and foreign businesses repatriate their hard earned dividends and profits back to their country has led to impressive indices posted by NGX in May, June and July this year.
Despite the soaring inflation, Nigerian stocks posted an impressive performance by out-shining its peers in Sub-Saharan Africa, registering a month-to-date gain of 6.4 per cent at the end of May 2023.
This was even as investors trading on the floor of the Nigerian Exchange Limited (NGX) gained a total of N5.3 trillion in the first six months (H1) of 2023. Also, foreign portfolio investments (FPIs) appear to be gradually coming back in the economy as total foreign transactions at the floor of the NGX grew to $60.49 million in the month of June 2023.
This actually bodes well for the exchange who has continued to be the preferred listing destination for companies seeking to raise capital via corporate bonds, equities, private companies and even SMEs looking to raise public capital.
Capital is indeed critical for business growth and according to the Chief Executive Officer, NGX, Temi Popoola, NGX takes pride to being home to the best of Africa’s enterprises listed across its premium, main and growth boards and the premier listing destination of fixed income securities prioritizing outstanding customer service and experience. Recently, the Exchange in a statement announced the listing of the Federal Government’s N130 billion Sovereign Sukuk on its platform.
The DMO also revealed that the total Sovereign Sukuk issued from 2017 till date currently stands at N742.557 billion and the proceeds have facilitated the construction and rehabilitation of over 75 roads and bridges across the country.
Across the exchange, from January till date, FG listings have risen to about N29.267 billion, state bonds have yielded N137.33 billion while corporate bonds listing stood at N161.28 billion. Furthermore, Sterling Holdings Plc, FTN Cocoa Processors, Neimeth Plc listings stood at N49.92 billion while others stood at N21.65 billion.
Commenting on the development, the Divisional Head of Capital Markets at NGX, Jude Chiemeka, emphasized the significance of the Sovereign Sukuk issuance and subsequent listing on NGX.
The listing demonstrates the FG’s dedication to developing critical infrastructure through innovative and cost-effective financing structures. NGX is fully committed to providing a robust exchange infrastructure that facilitates efficient capital accessibility for the government to raise essential funds, addressing the infrastructural gap and boosting economic growth. The listing of the Sovereign Sukuk on the Exchange is seen as a positive move, offering an exit opportunity for existing investors and further strengthening the Nigerian capital market.
Furthermore, the Exchange has continued reiterating that it is targeting more listings and is engaging companies in discussions to list on its platform.
Stakeholders’ views
Prominent stakeholders, including business leaders have commended the NGX for its support in achieving business objectives. Founder and Chairman, Dangote Group, Aliko Dangote, said the company’s sojourn in the market has afforded many Nigerians as well as institutional investors to buy into companies.
He explained that the funds raised were invested in several expansion projects which have yielded desired fruits. Dangote said, “We have raised funds from the capital market and created value for shareholders. NGX exists to be a major catalyst as it offers sustainable wealth creation”.
Commending the NGX on the support afforded to MTN Nigeria, its Chief Executive Officer, Karl Toriola, said the company has had a positive experience from listing on the stock exchange and added that the rigour of that process should give investors’ confidence in the transparency and governance of the institutions that list on the stock exchange.
The Chairman, BUA Group, Abdul Samad Rabiu, said, “As a listed company, BUA Group has benefited first hand from NGX’s effort to chart the path for the sustainable development of the Nigerian economy.
NGX has been a most trusted partner in helping us achieve our business objectives by providing an efficient platform that is ever evolving to meet our growing needs’.
For his part, the Group Chief Executive Officer, Access Holdings Plc, Herbert Wigwe, said, “We have been listed on the NGX for 25 years. We have been able to raise money from the exchange because of the confidence people had in the exchange and went ahead to consummate a merger that created the institution that we are today”.
Conclusion
Hence, it is no doubt an exciting time for the investing community as stakeholders are holding on to the belief that the NGX can live up to its commitment to be an open and vibrant exchange, constantly evolving to meet the needs of its stakeholders.
The exchange is truly focused on its mission of building a rich heritage as the first and foremost security asset exchange in Nigeria championing Africa’s sustainable growth and development. Also, with a renewed commitment to digital transformation and innovative products and services, it stands resolute in its quest to be Africa’s preferred exchange hub.
