NGX restrategises to woo fintechs, millennials to stock market
…To address perennial issues constituting disincentive to investment
As part of efforts to deepen the market in 2022, the Nigerian Exchange Limited (NGX) yesterday, unveiled plans to develop a focused strategy that would attract financial technology (Fintech) firms to the nation’s stock market.
Addressing participants at the virtual NGX 2021 Market Recap and Outlook for 2022 in Lagos, yesterday, the Chief Executive Officer of NGX, Temi Popoola, said the exchange has concluded arrangement to launch a Nasdaq-style board, an initiative that would help woo more tech companies and Nigerians in diaspora to the exchange this year.
According to him, the initiative would enable the exchange to address major constraints such as listing rules and other perennial issues that have given them the impetus to access capital offshore.
Findings showed that Nigerian fintechs are approaching investors and getting funded, especially from venture capitalists (VC) in countries such as the United States, United Kingdom, Switzerland and Belgium. From these offshore destinations, these fintechs have raised over $876.5 million in the last six years.
From 2014 to 2020, for instance, fintechs raised about $600 million in funding, attracting 25 per cent ($122 million) of the $491.6 million raised by African tech startups in 2019 alone – second only to Kenya, which attracted $149 million.
Experts argued that these venture capitalists have invested a huge amount of money in emerging financial services startups, thus making it possible for fintech firms to grow and access more capital offshore.
But with the initiative, Popoola said fintechs should be able to raise capital by inviting long-term investments, trading equity-backed securities, government bonds and other financial assets available on the capital market.
“Today, globally, there are lots of capital raising from tech companies. Our market can be a source to raise this capital. SEC has already taken the leadership. It will help to drive economic growth and mobilise capital from sectors of surplus to deficit,” he said.
In addition, he said the exchange would also focus more on digitising its processes and operations across the value chain to attract more investors, especially the millennials and youths, who are increasingly turning to alternative investment options.
He expressed worry that the market currently is made up of a large number of the older generation, stating that the sustainability of the nation’s stock market will require active participation and involvement of the youths.
However he noted that with increased technology, the exchange would integrate the market to digital banks and other transactions to make the capital market a viable investment option to investors across segments.
Furthermore, he added that the exchange would pay attention to the quality of companies already listed on the bourse and those approaching the exchange for listing to ensure a stronger and healthy market.
To this effect, he announced that companies that do not meet with the exchange post listing requirements after due considerations would be delisted from the exchange daily official list voluntarily.
Earlier, the Director General, Budget Office of the Federation, Ben Akabueze said for the nation to boost its revenue, there is need to focus more on efficiency of spending, not necessarily reducing government spending.
He said: “Growth is still tepid in Nigeria. The option now is to shore up revenue to GDP ratio. What we have currently is a serious revenue issue not debt sustainability issue. Our public expenditure to GDP is one of the lowest, we need to focus more on efficiency of spending to boost revenue,” he said.
He said Nigeria made a huge loss from oil shock in 2020, noting that predictions for most of the year were below projected estimates.
He attributed the shocks to reduction in oil activities occasioned by Covid-19 crisis and insecurity arising from theft of crude oil.