TEMI POPOOLA is the chief executive officer of the Nigerian Exchange Limited. In this interview with JOSEPHINE OKOJIE, he talks about the leadership he brought to the exchange and the digital transformation agenda of NGX.
What were your objectives for the exchange when you resumed as CEO of the NGX?
I assumed the role of the chief executive officer of Nigerian Exchange Limited at both a challenging and a historic period in the Nigerian capital market. Challenging for two reasons; the global economy was coming out from the Covid-19 pandemic that had led to a risk-off sentiment towards the frontier and emerging markets and challenging because of the emerging competitive landscape where we continue to witness a rise of non-bank competitors in both the primary and secondary markets. It was a historic year because the exchange successfully demutualized, a befitting result of several years of hard work and devotion by the stakeholders.
I had three major objectives in my first year. The first was internal to the exchange by ensuring the stability of the newly established institution post demutualization with a focus on building the right team and establishing the right culture. It was also important that many of the laudable projects and initiatives that the exchange was involved with before I joined continued on the path of a seamless execution. The second was around the markets. I thought it was important to build on the exchange’s rich history as the first and foremost multi-asset securities exchange in Nigeria, by championing a digital transformation agenda that will focus on the delivery of our products and the diversification of our product offerings. Thirdly, I had a focus on establishing the right partnerships and building credibility with many of our stakeholders, primarily our regulators and customers. We have made good progress in these thematic areas but there is still a lot of work to be done. I am surrounded by a very strong team and I continue to receive very strong support from key stakeholders. The Exchange is geared towards value creation for shareholders, retail investors, technology adoption, innovation, competence, and building a very robust marketplace for capital market products and services.
How would you describe the capital markets landscape in Nigeria and across Africa in the last 5 years?
Across the African continent, the past 5 years have been a tale of two sides. On one hand, we have witnessed significant improvements in the areas of regulation, market awareness, technology adoption, retail investors’ coverage, user experience, and product diversity. We have also witnessed an increasing trend toward integration of capital markets to help drive scale and improved capital flows. For example, the capital market has witnessed the launch of the African Continental Free Trade Area, which provides an avenue to foster strategic collaboration and partnership between capital market regulators in different African countries to facilitate the free flow of capital across the continent. There is also an ongoing collaboration across the various exchanges in Africa through the African Exchange Link Project (AELP) which is a joint initiative by the African Securities and Exchanges Association (ASEA) and the African Development Bank (AfDB), aimed at unlocking the Pan-African investment flows, promoting innovations that support diversification for investors, and addressing depth and liquidity in the markets. On the other hand, the capital markets, over the past five years, have had to deal with headwinds, accentuated by the pandemic. Foreign capital has slowed considerably, reversing in many cases and the “Africa rising” narrative that drove a lot of the global attention that came the way of our capital markets, have reversed somewhat. Perhaps the biggest trend, over the past five years, and this is not unique to the African continent, is the rise of Private markets as a means for capital formation, over public markets. Within the Nigerian capital market, we have seen an increase in awareness and domestic capital flows by both the institutional and retail investors with a growing base of investors who are refusing to be limited by geography or asset classes in their investment philosophy.
Q: NGX is committed to developing innovative solutions that drive, not just internal efficiency at the exchange but that support wider efforts by various stakeholders to democratize finance in Nigeria.
What would you identify as the key growth drivers for the exchange in the last year?
There have been internal and external drivers. Externally, we continue to receive strong support from the apex regulator the Securities and Exchange Commission (SEC), the Ministry of Finance, the Central Bank of Nigeria (CBN), Government and Capital Market Operators, and other critical stakeholders. There has also been an increased allocation to our markets by domestic institutional investors. Strategically, our renewed focus on technology to deliver innovative products and services to our stakeholders and the ability to collaborate and forge strong partnerships with our clients, intermediaries, and the capital market ecosystem have been major growth drivers. None of these will be possible without a strong team of professionals which I have been lucky to have over the past year.
You are leading a very laudable digital transformation initiative for the Exchange, what is the rationale behind this?
Technological innovation has enormous potential to reconfigure and radically improve the efficiency of global capital markets. Therefore, to thrive, you must embrace technology. Accordingly, NGX is committed to developing innovative solutions that drive, not just internal efficiency at the exchange but that support wider efforts by various stakeholders to democratize finance in Nigeria. Over the years, the Exchange has grown to become a technology powerhouse that leverages smart business models to deliver vertical platforms across capital formation, investment, capacity building, market development, and a plethora of other services within the capital markets ecosystem. We are building a capital market that will give investors, and businesses looking for capital, more direct, immediate, and cheaper access to one another, by leveraging current advancements in technology and relying on strategic partnerships. In keeping with our strategic aspirations, we brought together a cast of leading industry experts to dimension the digital transformation of the financial services space with a keen focus on the Nigerian capital market at our inaugural NGX TechNovation Conference, in 2021. The event with the theme, Technology, Platforms and Markets, featured critical discussions around technology, partnerships, and innovation that can boost the advancement of the Nigerian economy.
There have been a lot of landmark achievements for NGX, tell us about some of the most outstanding developments for you?
Last year brought us closer to some of our key strategic objectives of a digital transformation of the capital markets, the democratization of finance in Nigeria, improved customer experience, improved stakeholder engagement, deepened capital market penetration, and optimized internal processes. We witnessed several milestone accomplishments in the areas of operational agility, people development programs, new product development, market awareness, policy advocacy with stakeholders in the public and private sectors, strategic alliances, and partnerships to promote sustainable investing.
We facilitated the revolutionary MTN Offer. We collaborated with MTN Nigeria, Chapel Hill Denham and other capital market stakeholders to deliver the first-ever end-to-end digital offer in the Nigerian capital market. I am delighted that the collaboration delivered opportunities to onboard additional retail investors into the market, with approximately 76 percent of successful applicants via digital platforms being women and 85 percent of them being under the age of 40. The ground-breaking listing of BUA Cement’s N115billion Bond, the largest corporate bond issuance, and listing of LFZC Funding SPV’s N10billion, the longest dated corporate bond, among other corporate and government bonds come to mind in 2021. Recently, we launched West Africa’s first Exchange Traded Derivatives (ETDs) market with Equity Index Futures Contracts. Despite the achievements, there is still a lot to be done and we will continue to collaborate and look for innovative ways to deepen the market and create wealth by stimulating the growth and development of Nigeria.
Read also: NGX CEO canvasses increase in long-term sustainable finance
Looking at your one year in office, what have been the biggest contributory factors to your excellent leadership and remarkable achievements?
Let me start by saying that I have a supportive Board of Directors at the Exchange and their contributions in terms of strategic leadership and guidance are commendable. The wider NGX ecosystem has offered a tremendous amount of resources that we have been able to leverage to drive success together and also, my investments in people. There is a popular quote that “a leader is only as strong as his/her team”. So, I spend ample time with my team, and we are always deliberating on how to improve the customer experience for the end-users, constantly seeking new ideas and suggestions to build an Exchange in line with our renewed vision. I believe in the right partnership and collaborations, so you will consistently see me working with my team to proceed with stakeholders on a shared common vision, building sustainable partnerships and collaborations both locally and internationally across multi sectors. I am a huge advocate of using technology to make processes and order flows simple, I believe that with technology, we can create innovative and simple ways to communicate to a wider audience and develop a plethora of ways to improve value addition to the business.
The fintech sector is a rapidly developing ecosystem and Nigeria seems to be a hotbed for many foreign investments in this market, what plans does the exchange have to bring this promising sector into the exchange?
Nigeria is home to over 200 fintech standalone companies and as you rightly noted, the fintech market has become a hotbed for many foreign investments. Entrepreneurship has also exploded within the utilities, logistics & transportation, e-commerce, healthcare, and agribusiness sectors. A lot of the capital for these high-growth sectors is coming from the venture capital and private equity space. For example, in 2019, Nigeria attracted a record high of $747 million in tech VC investment. Over the past year since my assumption into office, we have initiated extensive engagement with companies in the fintech sector as well as other leading companies in the start-up scene. One of such engagements is the hosting of the inaugural NGX Technovation Conference as I mentioned earlier. At the Exchange, we are looking to collaborate with these fintech companies to create and sustain value. In addition, the exchange, working with other players such as the Securities and Exchange Commission (SEC), to introduce a specialized technology board and develop a comprehensive strategy for technology listings to encourage the listing of these fintech companies.
