Capital Market Can Solve Forex Scarcity Crisis, Create Wealth—Popoola

By Aduragbemi Omiyale

The chief executive officer of the Nigerian Exchange (NGX) Limited, Mr Temi Popoola, has said the capital market can be harnessed to solve the foreign exchange (FX) scarcity crisis the nation is facing.

The capital market expert gave this submission at the Investment and Securities Bill (ISB) Lawmakers’ Retreat convened by the Securities and Exchange Commission (SEC) in Lagos on January 30, 2021.

Nigeria has been facing a forex scarcity crisis for a while now and this was made worse by the coronavirus pandemic of 2020, which made foreign currency earnings quite difficult as most nations had to shut down their economies.

The price of crude oil also did not help matters and because it was the main source of FX for the country, revenue from there waned, causing the Central Bank of Nigeria (CBN) to begin to ration forex.

But Mr Popoola feels this issue can be partly solved if the capital market is given full support through the legal framework to attract foreign investors into the country.

In his presentation at the gathering, he said the capital market has the capability to stimulate economic growth, mobilise savings, create wealth, contribute to infrastructure development and reduce the scarcity of foreign currency.

“A significant number of the developmental challenges the country presently faces could be solved through the capital market.

“This is supported by the fact that the capital market stimulates economic growth, mobilises savings, creates wealth, contributes to infrastructure development, reduces scarcity of foreign currency, aids financial inclusion, and promotes transparency and good governance.

It is, therefore, crucial that the market becomes more innovative in product development to attract a more diversified array of market players both in the listing and trading segments,” he stated.

Mr Popoola, while highlighting three priority areas for deepening the capital market, stated that, “For the capital market to effectively contribute to sustainable economic growth, the following must be looked into critically: legislation and effective legal frameworks; macroeconomic and political stability; and flow of capital.”

“It is, therefore, a delight to see key capital market enablers come together to analyse the Investment and Securities Bill, and identify how it can be properly harnessed to create a healthy environment for capital market growth.

“It is through collaborative efforts such as these that we will be able to reap the emerging opportunities – particularly in technology – available in our economy,” the NGX chief added.