Key players in Nigeria’s financial sector convened in Lagos over the weekend for the annual workshop of the Capital Market Correspondents Association of Nigeria (CAMCAN). The theme for this year’s workshop was “Bridging the Gap Between Investors and Issuers in the Nigerian Capital Market,” spotlighting the need for advanced technology, improved corporate governance, and streamlined regulatory processes to further the ongoing recapitalisation of the banking sector.
Among the speakers at the event was economist and Chief Executive Officer of Cowry Asset Management Limited, Johnson Chukwu, who stressed the necessity for the Central Bank of Nigeria (CBN) to better utilise its existing IT infrastructure and Bank Verification Numbers (BVN) to accelerate the verification of offers from banks. Chukwu raised concerns regarding delays in the verification process, noting that several offers, which closed in August, were still pending as of December. He queried, “With the level of advanced technology, why is it taking so long for CBN to conclude these verifications?”
Chukwu argued that a more efficient verification process would bolster investor confidence and allow investors to promptly receive their allotments or reinvest their funds into other profitable ventures. He pointed out that the current stringency of CBN requirements, such as three-year audited financial statements and board resolutions for corporate investors, could deter engagement from potential investors. “While regulation is necessary for maintaining stability, there is a need to leverage existing customer information to avoid imposing onerous conditions,” he stated.
In discussing the strategic importance of banks’ recapitalisation, Chukwu remarked that successful capital market participation not only raises money but also instils confidence in both banks and investors. He noted, “A well-capitalised bank is perceived as financially stable, reducing risks for investors and encouraging further investments in the sector.” To enhance the resilience and competitiveness of Nigeria’s banking sector, he called for increased collaboration between banks, investors, and regulators. Chukwu further suggested that a more predictable regulatory environment would enable better planning and reduce operational risks associated with frequent policy changes.
Also advocating for improved practices, Emomotimi Agama, Director-General of the Securities and Exchange Commission (SEC), highlighted the importance of corporate governance and risk management in the recapitalisation process. Represented by John Achile, the Divisional Head of Legal and Enforcement, Agama remarked that the SEC's framework for banking sector recapitalisation covering 2024–2026 provides explicit guidance for issuers while securing investor interests. He pointed out that SEC is exploring blockchain technology to foster secure transactions within the sector, noting, “The oversubscription of most recapitalisation offers in 2024 reflects strong investor confidence.”
Agama acknowledged several challenges facing the recapitalisation exercise, including market volatility and a lack of retail participation, but he also identified opportunities to leverage technology for deeper financial inclusion and enhanced market liquidity. He explained that initiatives, such as developing green bonds and sukuk, could diversify investor engagement. SEC’s focus on digitalisation aims to streamline bureaucratic processes and ensure timely application reviews, reinforcing their commitment to transparency amid the risks of technology adoption.
In addressing the increasing issue of unclaimed dividends, Agama attributed it to gaps in regulatory compliance and investor awareness. He asserted the SEC’s commitment to reinforcing its dual role as a regulator and protector of investors to build confidence in the capital market.
CAMCAN’s Chairman, Chinyere Joel-Nwokeoma, remarked on the media’s role in improving public understanding concerning the market dynamics. She called for enhanced journalism that would inform investors’ decisions and encourage participation.
Throughout the discussions, stakeholders highlighted the vital role of the capital market in the recapitalisation process, emphasising that successful initiatives like IPOs and bond offerings uplift investor confidence and positively influence the broader financial landscape. There was a consensus that bridging the divide between investors and issuers is crucial to achieving the goals of recapitalisation.
As Nigeria’s banking sector progresses on its recapitalisation path, stakeholders are aligned on the importance of leveraging technology, fostering collaboration, and enhancing corporate governance. The expectation is that these initiatives will underpin the security and growth of Nigeria's banking system while amplifying investor confidence and establishing the capital market as a pivotal engine for economic expansion.
Source: Noah Wire Services