Nigerian capital market primed to support banking sector recapitalization

The Nigerian capital market is strategically positioned to drive the ongoing bank recapitalization exercise, leveraging advanced technology to facilitate the capital-raising efforts mandated by the Central Bank of Nigeria’s new requirements.

Nigerian Exchange Group Plc (NGX Group) and its subsidiaries are spearheading this initiative, working in close collaboration with the Securities and Exchange Commission (SEC) to ensure a seamless and effective process.

Group Managing Director of NGX Group, Temi Popoola emphasized the market’s readiness for this significant undertaking: “The capital market has historically been a catalyst for transformative change during pivotal government interventions.

“This central bank-led recapitalization presents a unique opportunity to make a real, lasting impact.” NGX Group’s approach aims to generate substantial liquidity, with projections indicating that banks could raise approximately N3 trillion over the next two years.

Popoola added, “This capital influx has the potential to revitalize the market, providing an avenue for foreign capital to re-enter.” He stressed that NGX Group is working in tandem with SEC to ensure the initiative’s success.

The GMD/CEO also highlighted the critical role of technology in this process, aiming to enhance financial inclusion and deepen market participation, particularly among retail investors. “Our goal is to make these transactions more digital, reaching the core of our country’s financial inclusion objectives and engaging retail investors,” he explained.

The platform was recently demonstrated to market operators and other stakeholders at the exchange. Popoola noted that banks had already integrated their applications with the platform. Additionally, banks and other issuers have been utilizing the “Facts Behind the Offer” platform created by the Exchange to engage investors for their capital raising exercises. Notably, Fidelity Bank Plc and International Breweries have recently leveraged this platform.

Acting CEO of Nigerian Exchange Limited, Jude Chiemeka reinforced the collaborative efforts between NGX and SEC to ensure the recapitalization exercise’s success. “Effective implementation requires extensive collaboration with stakeholders and regulators. The SEC is taking a strong lead in this regard,” Chiemeka stated.

SEC Director-General Emomotimi Agama, during a market engagement with NGX Group, expressed confidence in the regulator’s preparedness to handle the increased activities and challenges that may arise from the exercise. “Drawing from our experience with past recapitalization efforts, the Commission is well-prepared as a regulator to navigate any challenges or increased activity that may emerge from the planned bank recapitalization,” Agama affirmed. He assured that the relevant departments and procedural manuals are in place to guide the exercise.

The quality of leadership at both SEC and NGX Group is noteworthy. Dr. Agama, the Director-General, is an astute capital market professional, scholar, and regulator with decades of experience and expertise. The leadership at NGX Group comprises professionals who have honed their skills in globally acclaimed markets like Wall Street as well as the domestic Nigerian capital market. With these seasoned leaders at the helm, industry stakeholders can be confident that the recapitalization process will be seamless and successful, setting a benchmark for the West African region and the broader continent.