• Friday, March 29, 2024
businessday logo

BusinessDay

Capital market can deliver Nigeria out of current challenges, says FMDQ CEO

Bola-Onadele-Koko

Nigerians hope that leaders of the country will one day free themselves from personal interests and take decisions for the good of the entire economy. This renewed optimism comes as countries battle COVID-19 and its current/future impacts on their economies.

While the pandemic continues to dry major sources of revenue to Nigeria, stakeholders believe that its capital markets still have the potential to fund the nation’s critical infrastructure, a situation which the government must admit and without further delay oil the processes of reaping the benefits.

Speaking during a fireside chat session at the BusinessDay digital dialogue titled ‘National Conversation: Mapping Nigeria’s Response to COVID-19’, Bola Onadele.Koko, CEO, FMDQ Group, gave status update on the capital market and the key features that define its future.

He added that government finances alone cannot deliver all the infrastructure the country needs, such as in education, power, housing, roads, etc.

The fireside chat, titled ‘Challenges, opportunities and outlook for the Nigerian capital market in the aftermath of COVID-19’, was moderated by Frank Aigbogun, publisher, BusinessDay Media.

“Capital market is the sector that can deliver Nigeria out of the current challenges. The capital market is very critical at this point in the economy,” Onadele.Koko said.

On how Nigeria can take opportunities from COVID-19 challenges to develop the capital market, he said, “Let us look at what we have in place and what we need to put in place…in terms of infrastructure.”

He said for the market, there are solid people and infrastructure in the capital market – NSE, FMDQ, CSCS, FMDQClear.

“So if you look at the box of infrastructure, the people to drive the business, Nigeria has them. What we need is the legal framework. Without the legal framework, we cannot attract the required capital,” he said, noting that rigid rules can’t help in efforts to attract market liquidity.

Nigeria’s total bond market (non-sovereign), which is less than N1 trillion amid rising pension funds remains a source of worry to the stakeholders.

“We need to say what is our philosophy. We have to cancel the question on what is our philosophy. A simple alignment of our philosophy with government regulation will help us succeed, otherwise we will have to struggle for long,” Onadele.Koko said.

“We need to ask, how do we begin to create the kind of alignment between private sector and government in relation to capital market? How can capital market support the SMEs? The private sector should be interested in what is in it for it,” he said.

On economic diversification and capital flow, he said, “I’m not sure we are sincere in the issue of diversification. Sorry to say, leadership is very critical in the issue of diversification. We need the leaders that can see 40 years of Nigeria without crude oil. If we are not careful, we are going to miss the opportunity again. Thanks to CBN for opening the opportunity for private capital. Our ambition is to be the leading private capital destination come 2024. Private companies must be able to unleash the entrepreneurial potential of the country.”

Speaking on what impact the current FX regime will have on long-term capital formation, Onadele.Koko said the FX market is the nervous system of the capital market.

“A right FX market structure will help capital travel from all over the world. We in FMDQ believe that if you anticipate a risk, you must be able to hedge it. That’s where derivatives come in. There is a lot of work to do. Markets work stronger when governance and credibility are high. Without attractive FX market, we will have challenges for capital coming into the country,” he said.