Despite Nigeria’s large population of over 200 million people, the country’s capital market remains significantly underutilized, with only 7 million Nigerians currently invested, according to Sunday Oluropo Dada, President of the Chartered Institute of Stockbrokers (CIS).
Dada stated this on Sunday and also noted that the Central Bank of Nigeria (CBN) should leverage advanced technology for the bank recapitalization process to enhance efficiency and effectiveness.
He emphasized the importance of this approach in connecting with the younger generations and expanding the investor base in a country with a population of over 200 million and seven million capital market investors.
Dada recommended that banks should raise a significant portion of the additional capital through public offers to increase market participation.
Additionally, he suggested that the entire process, from the closing date of the offer to share allotment, should not take more than 20 working days to prevent investor funds from being idle for extended periods.
Dada said: “To ensure effective capital raising exercise by banks, the institute strongly recommends as follows: There should be a wholesome adoption of technology in every stage of the process.
‘’As we have seen in recent public offerings, the path of reaching out to investors through telephone apps is what endears the young generation, including the millennial to modern-day investments.’’
He continued: “Banks should consider raising a significant portion of the additional capital through public offers, to increase the number of investors in the market.
‘’It is sad that, in a country of over 200 million people we still have just about seven million people with investments in the capital market. So, attracting more new investors should be a key objective of the exercise.”
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Commenting on increased competition within the banking sector, Dada noted that diversifying the market can mitigate the risks associated with concentration, fostering a more competitive and robust banking environment.
He highlighted the importance of strict adherence to good corporate governance and the protection of minority shareholders during the recapitalization process.
And also encouraged capital market operators to provide professional guidance to investors to improve research capabilities and the expertise of personnel within the industry
Dada encouraged investors to verify the legitimacy of institutions and stockbrokers involved in the recapitalization offers through official channels while expressing confidence that the 2024-2026 Banking Sector Recapitalisation Programme if properly executed, holds the potential to significantly boost Nigeria’s economic growth and advance the nation towards achieving a $1tn economy.
According to the report, the Securities and Exchange Commission has issued a framework to assist the Central Bank of Nigeria’s bank recapitalization program.
The framework is intended to facilitate a smooth, transparent, and efficient capital-raising process for banks and holding companies involved in the program.
Capital markets facilitate the trading of stocks, bonds, currencies, and other financial assets by connecting buyers and sellers. This market encompasses both the stock market and the bond market.
Capital markets support aspiring entrepreneurs and foster the growth of small businesses into larger enterprises.
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