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Leveraging technology to grow Nigeria’s capital market

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As regulators battle with the challenges confronting the Nigerian capital market including the lack of confidence due to 2008 crash, loss in value of investment, and rise in unclaimed dividend among others, the market, however, is gradually getting intertwined with digital technology.

Last year, the market was one of the best performing markets in 2020 owing to the way and manner in which it conducted transactions especially as global markets were affected by the COVID-19 pandemic, which also resulted in lockdowns and shutdown in economic activities.

Precisely on March 23 and 24, 2020, the Nigerian Stock Exchange (NSE) , now called the Nigerian Exchange Group (NGX), took steps to preserve the health and safety of its stakeholders by activating its Business Continuity plan, which saw the transition to working from home and remote trading in response to the spread of the COVID-19.

Since then, the exchange has maintained seamless working and trading operations, experiencing zero down time. Thus, it is not surprising that digital technology is driving the next phase of global economic growth, an indication that the contribution of mobile trading to total turnover could go up in the next few years.

The capital market is gradually getting intertwined with digital technology and today, the question is not whether companies involved in raising equity and debt will incorporate new technologies into their operation, but how much of these technologies they will incorporate.

The market regulators- the Securities and Exchange Commission (SEC) and the NGX are not oblivious of the developments around digital technology and how it can aid the financial inclusion as well as transform the capital ecosystem and have stepped up efforts in partnering with FinTechs.

Speaking at a recent SEC webinar themed; Digital platforms: New Frontier for capital Market inclusion, the Director General, SEC, Lamido Yuguda, stated that it recognizes the importance of digital platforms for democratizing access to capital market products and services for greater financial inclusion in the capital market.
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Citing the Enhancing Finance in Africa (EFInA) 2020 Report on the Nigerian “FinTech Landscape and Impact Assessment Study”, Yuguda who was represented by the Executive Commissioner Legal and Enforcement at the Commission, Reginald Karawusa, noted that as at December 2018, about 40 per cent of Nigerians were still financially excluded, which meant that the 40 per cent of Nigerians who are financially excluded, especially those between the ages of 18 and 35 are also excluded from participation in the Nigerian capital market (NCM).

He restated the Commission’s objectives, which are to build a modern, efficient and low cost market characterized by adequate product offerings, efficient processes and market integrity.
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“We must do this continually by raising standards, embracing new technology, introducing new products, enhancing our processes, widening the investor-base, invigorating investor education and providing an enabling regulatory framework to support it all” Yuguda said.

Corroborating the SEC’s boss, the Chief Executive Officer, Nigerian Exchange (NGX) Limited, Temi Popoola, said that the increase in data collection and analysis recorded in the global markets presents an opportunity for Nigeria’s capital market to achieve key sustainable development targets across other sectors of the economy via digital transformation.

Popoola noted that digital platforms power the most successful businesses in the world today and by leveraging digital platforms, these companies have achieved growth on an exponential scale, almost 10 times that of some competition.

According to Popoola, digital transformation is a required step for Nigerian’s capital market to further deepen financial literacy.

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