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The Nigeria-UK Capital Markets Project

The Nigeria-UK Capital Markets Project Tuesday launched its inaugural report on the state of the Nigerian capital markets, stressing the need to boost the integrity of the markets, improve information disclosure, reduce potential for manipulation, promote transparency and good governance and generally improve standards and investor confidence.

This came as the Lagos State Governor, Akinwunmi Ambode, said that tax incentives could be a major catalyst for greater capital flows into the capital market in Nigeria.

Generally, the report has detailed recommendations for the legal and regulatory environment, and the overarching aim to deepen market capacity and attract domestic and international investment.

However, one of the key recommendations is the establishment of a platform through which market participants can collectively focus on key issues around market development.

The report was unveiled at a short ceremony at the Nigerian Stock Exchange (NSE) in Lagos. It is the first in a series of research papers that will analyse the state of Nigeria’s capital markets and make recommendations for improvement.

The report is the product of several months of collaborative work between the Nigerian Capital Markets Solicitors Association and the Law Society of England and Wales.

Other recommendations by the report include: reducing the cost of capital markets transactions and tightening the regulatory enforcement process, introducing an efficient and reliable dispute resolution mechanism as a central mechanism to secure investor confidence, reforming elements of the tax system for the markets, alongside a broader suite of additional incentives to deepen capital market activity and focusing on market education and capacity within market operators, as well as deepening the knowledge base of the retail investor community.

The report was presented by the President of the NSE, Mr. Aigboje Aig-Imoukhuede, and former Lord Mayor of London, Sir Roger Gifford, who both serve as co-chairs to the UK Emerging Capital Markets Taskforce in Nigeria.

Receiving the report, Aig- Imoukhuede, said: “I am very happy to take receipt of this inaugural report by the Nigeria-UK Capital Markets Project. Not only has significant time and effort been put into the research and delivery of this report, but the collective action of a broad group of market participants behind an initiative to enhance our capital markets over the long term is a very positive move. I am delighted with the quality of the report, I look forward to working with the delivery unit and all other stakeholders to take forward its recommendations and I am particularly happy to see the level of interest within the Group to institutionalise this new structure for long term benefit. I would like to thank the group’s leadership, as well as Sir Gifford and his team for their hard work and for achieving the level of momentum we now have.”

One of the report’s co-authors, Elizabeth Uwaifo, said: “On behalf of the members of the Nigeria Delivery Group, I am delighted to present the preliminary findings and recommendations of this project’s first report. I am also delighted at the cohesive way in which this group has worked as a collective, with the common goal of deepening our capital markets for long term growth. In line with the report’s key recommendation, the group has resolved to institutionalise its current interim structures. This will enable it to play a long term role in the development of the Nigerian Capital Markets, and to replicate the valuable role played in the UK by the City UK organisation.”

Already, the Nigeria Delivery Group and a collective made up of capital market operators, regulators, platforms and experts, has responded to the recommendation by pledging to institutionalise their interim structure.

The Nigeria Delivery Group is a collective made up of capital market trade groups, trading platforms, and subject matter experts, established to provide a harmonised viewpoint on the future evolution and growth of Nigeria’s capital markets. The organisation was established as part of the Emerging Capital Markets Task Force Nigeria Project, and, in response to a key recommendation in its inaugural report, has resolved to institutionalise into a permanent platform.

Members of the Nigeria Delivery Group include: NSE, FMDQ OTC Plc, NASD Plc and capital market trade groups comprising: Chartered Institute of Stockbrokers, Association of Issuing Houses of Nigeria, Association of Reporting Accountants of Nigeria, Fund Managers Association of Nigeria, Association of Investment Advisers and Portfolio Managers, Association of Corporate Trustees of Nigeria, Institute of Capital Market Registrars, Association of Assets Custodians of Nigeria, Pension Fund Operators Association of Nigeria, Capital Market Solicitors Association and Financial Markets Dealers Association.

Meanwhile, Governor Ambode while playing host to the delegation of the UK-Nigeria Emerging Capital Market Taskforce led by Gifford and Aig-Imokhuede, expressing optimism that the report on the state of the Nigeria Capital Markets, put together by the Taskforce, will benefit Lagos and Nigeria on the long run. He commended the team for embarking on an initiative which he said, has the potential of impacting the transformational development of the capital market.

He said it was not accidental that Lagos was the choice destination for the launch of the report, adding that the state currently holds the fifth position as the largest economy in Africa.

“Lagos state has an important role to play in this process, not just as the host of the key market platforms, but as the largest issuers of sub-sovereign bonds in the Nigerian Capital Market”.

“Even when you try to situate the level of bonds that we have taken and the level of growth and development that has taken place in Lagos, it’s very clear that the contribution of the capital market has been immense to us”, the governor said.

He also said that the capital market has the potential of empowering small and medium scale enterprises and larger companies with greater access to long term capital and introducing innovative financial products.

“We also want the economy of Lagos to expand and as we search to find a congress in cooperating together, as we move forward, we would be having more opportunities for younger Lagosians, people who are actually engaged in small and medium scale entrepreneurship to have more access to the capital market. This is something I look forward to,” he said.

Ambode also assured that his administration aside creating an enabling environment for protecting investments, will also ensure an efficient judicial dispute resolution and arbitration system. “I can commit myself to say that we would create an atmosphere where our judicial officers can actually sit down with capital market operators for us to find a channel to boost the objective of this project,” he said.

He further reiterated his administration’s commitment to working closely with the Taskforce delivery group to look at the recommendations as it affects Lagos state and work towards
implementing same.

Earlier, Gifford said one of the recommendations of the report, concluded in November 2014, is aimed at reducing the cost of capital market transactions and tightening the regulatory enforcement process among others.

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