Experts in the fixed income market have called for more active participation of retail investors in the fixed income space. At an investors’ conference organised by Comercio Partners Asset Management in Lagos, themed “Fostering Financial Inclusion Through Innovation” speakers at the event stressed the need to raise awareness on the opportunities in the fixed income market.
Speaking at the event, Patience Oniha, Director General of the Debt Management Office (DMO) and the Chairperson of the event said the DMO has introduced various products that would encourage retail participation in the fixed income space such as the monthly Savings Bond Program of the Federal Government.
“The retail market needs a significant push beyond talking to ourselves like this. There is a large population in Nigeria, and a lot of people do not know about these offerings. But if you look at the trend from the two years since we started, the subscriptions have been fluctuating,” she said.
Bola Onadele Koko, Managing Director/CEO FMDQ OTC Securities Exchange, and the Chief Host of the event said that FMDQ has realised the importance of keying into the work being done by the Securities and Exchange Commission and the Central Bank of Nigeria to drive financial inclusion in the country with the introduction of various financial literacy programs aimed at raising the awareness on the opportunities in the fixed income space.
“FMDQ supports organisations like Comercio Partners in promoting financial inclusion, and we have the Next Gen program where kids from primary schools are introduced to the financial sector and the fixed income instruments,” he said.
According to Koko, the introduction of TradeFi, an investment application that enables users to invest in fixed income securities from their mobile devices, would help solve the complexities around the financial market.
“TradeFi allows users to conveniently invest in Federal Government securities such as Bonds and Treasury bills, and the more people invest the lower it would cost the government in funding its budget and other obligations,” he said.
While taking investors through the TradeFi App, Nnamdi Nwizu, Co-Managing Partner and Head of Trading at Comercio Partners explained that TradeFi is an innovative platform that allows retail investors the opportunity to invest in fixed income instruments directly without going to the bank or through a third-party.
“The convenience the app brings to the market has not existed before, I believe this is something retail investors need to watch out for,” he said.
Sam Ocheho, the President of the Financial Market Dealer Association (FMDA) said TradeFi App would help to boost financial inclusion and ensure all and sundries are able to invest in fixed-income instruments.
Acknowledging the important role of technology in the financial market space, Ocheho said technology will help drive more young people to invest in fixed-income securities. This, he noted, would have a positive effect on the economy.
In an exclusive interview with BusinessDay at the event, Ibrahim Dikko, Chairman, Comercio Partners, noted that the launch of TradeFi would have a positive impact on the market as it would deepen the fixed income market and give room for more investors to put their money in risk-free government securities, and become skilled in the financial market.
“If you observe the current trends in the FinTech space, the financial system is experiencing disruption at an increasing pace. You will want to go to your bank’s branch, sit down with your branch manager or visit your stockbroker, but now, everything can be done from the comfort of your home. With TradeFi, we want to make it easier for people to have access to the market, and become knowledgeable as regard how market operates,” he said.
Speaking on the sidelines of the event with BusinessDay, Oniha said the medium-term strategy of the DMO office is in line with the 60% domestic and 40% external borrowing mix of the Federal Government.
“In the new budget, the new borrowing has been split into 50 % of domestic and 50% from external sources and as at December 2018, we had 68% of total public debt domestically while 32% was external. That is like saying we’re getting close. We do not have the 60/40 ratio in one year, if you remember we were coming from about 85/15, so, there is a provision in the budget to ensure we move farther in that direction,” she said.
On the strategies put in place to curtail the country’s growing debt profile, Oniha said the government has adopted a strategic plan to moderate debts, noting that the government does not have the capacity to keep borrowing to finance infrastructure.
“As you know those initiatives take time, you have to plan before implementation before you start seeing the flow, the focus is apart from raising funds we might be required to provide guarantees for various projects especially when the private sector is financing. The second component is debt – domestic and external – have grown, so we must begin to look at risk management which comprises both interest rate risks and exchange rate risks.”, she said.
