The Nigerian Exchange Limited has called on the Federal Government and the Central Bank of Nigeria to prioritise listed corporates in their procurement processes and access to foreign exchange.
According to the Chief Executive Officer of the NGX, Temi Popoola, this approach would encourage more companies to list on the Exchange and mitigate the prevalent FX challenges in the economy.
Popoola, who spoke at the last MTN Capital Markets Day pointed out that NGX is excited about the administration of President Bola Tinubu and its renewed hope agenda as it presents an opportunity to work with market stakeholders, including the regulators to address the challenges faced by the government and listed corporates.
“The singular biggest thing that can be done to change the face of the capital market is not investment bankers wearing suits and knocking on the doors of companies for the next listing but really intentional advocacy,” he said.
Popoola added “There are companies that would like to list on our Exchange, but they earn in dollars, their revenue to their bottom line is in dollars. There are also listed companies that would like to pay their dividends in dollars. However, the current regulation does not allow that.
“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.”
In addition, the NGX CEO disclosed ongoing discussions with the Federal Government to attract listings through supportive legislation. He argued that increased listings would boost government revenue, citing the transparency, higher tax contributions, and better governance exhibited by listed companies. Popoola highlighted the historical role of government support in facilitating the presence of many companies currently listed on the Exchange.
On the downgrade of Nigeria from a frontier market to unclassified, Popoola said, “This is a subject matter that gathered a lot of headlines but then the reality and the impact were slightly more nuanced. 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 suggested. A lot of those capital would have flown out already.”