Exit of Foreign Investors Impacted Nigerian ETFs Market—Popoola

By Aduragbemi Omiyale

The chief executive of the Nigerian Exchange (NGX) Limited, Mr Temi Popoola, has attributed the exit of foreign investors to the low performance of the Exchange Traded Funds (ETFs) market in the country.

Speaking on Wednesday at a webinar organised by the bourse, he, however, noted that efforts are being made to revive the space to make it attractive to domestic investors.

At the ETFs conference themed ETFs in the Nigerian Capital Market: Opportunities and Challenges, Mr Popoola described the West African ETFs market as very shallow because it is worth about N8.87 billion ($19.25m) unlike the South African ETFs market with a $7.11 billion capitalisation.

But he hinted that the Nigerian stock exchange would soon list four new ETFs.

“There has been a dearth of new ETFs listings on the NGX in recent years, however, there are bright spots on the horizon with four new ETFs listings in the pipeline.

“It is incumbent to state that current macro-economic challenges resulting in the exit of foreign investors impacted the ETFs space, which resulted in a sharp dip in the ETFs market Cap from 2020 highs of N24.5 billion. We are hopeful that the policy tilt of the new administration would impact positively on our market,” he stated.

Also speaking at the event, the Executive Commissioner for Operations of the Securities and Exchanges Commission (SEC), Mr Dayo Obisan, who also touched on the challenges in the market, expressed confidence in the ability of experts to proffer solutions.

He urged all stakeholders, including the Fund Managers Association, NGX, and other institutional investors, to extend the message of ETFs in order to deepen the market and make the asset class more vibrant, thereby driving growth in the capital market.

On his part, the Executive Director of the Central Securities and Clearing System (CSCS) Plc, Mr Adeyinka Shonekan, explained how the CSCS was using technology to improve the onboarding of retail investors into ETFs.

“CSCS has been driving the initiative to reduce the settlement cycle from T+3 to T+2 or T+1, and we have been engaging stakeholders to make sure we make this a reality,” he added.

Another speaker, Ms Adele Hattingh, who is the Manager, Business Development and Exchange Traded Products at the Johannesburg Stock Exchange (JSE), gave an overview of the South African ETFs market, including why investors should consider investing in the asset class.

The Managing Director, Vetiva Fund Managers Limited, Oyelade Eigbe, on her part also spoke on how retail investors could access the ETFs market in Nigeria and monitor their investments.

During the panel session, capital market experts further addressed the opportunities and challenges of the market, with liquidity as a central topic of discussion. Featuring were Mr Aigbovbiose Aig-Imoukuede, President, FMAN; Oladele Sotubo, CEO, Stanbic IBTC Asset Managers, FBN Quest Capital; and Nornah Awoh, Chief Equity Analyst/CEO, Palesa Capital Markets Associates.