The Nigerian Exchange Limited (NGX) has made a compelling appeal to the Federal Government and the Central Bank of Nigeria (CBN) to give precedence to listed corporates in their procurement processes and allocation of foreign exchange. This call comes as a strategic move to incentivize more companies to list on the Exchange and address the prevailing challenges related to foreign exchange in the economy.
Temi Popoola, the Chief Executive Officer of NGX, emphasized the significance of this approach during the recent MTN Capital Markets Day. Popoola expressed enthusiasm about the administration of President Bola Tinubu, specifically commending its renewed hope agenda. He sees this as a valuable opportunity to collaborate with market stakeholders, including regulators, to tackle the challenges faced by the government and listed corporates.
Popoola highlighted that intentional advocacy, rather than just seeking new listings through traditional means, is the key to transforming the capital market. He pointed out that there are companies interested in listing on the Exchange, but they earn revenue in dollars. The current regulatory framework prohibits these companies from paying dividends in dollars, and Popoola is actively engaging with regulators to address this limitation.
“We are working with regulators and policymakers to try to address that because this would create a lot more benefit to the government which is looking for FX resolutions to their challenges. We believe this will also unlock the dollars that people have saved in domiciliary accounts to be put into useful work in the capital market and economy,” Popoola stated.
Furthermore, Popoola disclosed that ongoing discussions with the Federal Government aim to attract listings through supportive legislation. He argued that increased listings would contribute significantly to government revenue, citing the transparency, higher tax contributions, and enhanced governance exhibited by listed companies. Popoola also underscored the historical role of government support in facilitating the presence of many companies currently listed on the Exchange.
Addressing the recent downgrade of Nigeria from a frontier market to unclassified, Popoola provided a nuanced perspective, stating, “The share of foreign investors in our market is already so small, 10 per cent and in some instances, five per cent so that the real short term impact is not as the headlines would suggest. A lot of those capital would have flown out already.”
As the NGX continues its efforts to strengthen the capital market, the collaboration with government bodies becomes crucial in navigating regulatory challenges and fostering an environment conducive to increased corporate listings. The outcome of these efforts is anticipated to yield positive results for both the government and listed corporates, providing impetus to the broader Nigerian economy.