Economy
Experts Seek Reorganization of Nigeria’s Financial Market Structure
By Modupe Gbadeyanka
The urgent need for the reorganisation of the present structure of the financial market in Nigeria has been stressed by stakeholders in the Nigerian capital market, asset management and banking sectors.
One of the experts, Mr Gbenga Adigun, the Business Head of Zimvest, noted that investors are gravely concerned with investment returns in light of the current low yield environment, while financial institutions are thinking of how their product development and service delivery should evolve with the changing needs of investors.
Mr Adigun gave this submission at the Zimvest Economy Conversations, a thought-leadership series of Digital Private Wealth and Investment Management Firm, Zimvest (Zedcrest Investment Managers), held on Saturday, June 20, 2020.
He and others agreed that there was an urgent need for a rethink of the nation’s economic philosophy and a reset of the financial market architecture.
The CEO of FMDQ Group, Mr Bola Onadele Koko, while delivering the keynote speech on the event theme The Economic Landscape and Investor Preferences in Post-pandemic Africa, highlighted the impact of the growing pandemic on African markets.
He laid emphasis on the slowdown in key segments of the economy including the financial markets, tourism, remittances and foreign direct investments. He called for a rethink of Nigeria’s economic philosophy with clarity from the fiscal policymakers which will be critical for gaining investors’ confidence.
“Now is the time to develop new and ingenious ways to develop and drive the Nigerian financial market and in the continent at large.
Private capital will especially be more essential as recent shocks have shown the limits of Governments’ abilities particularly in developing countries,” he said.
The capital market leader also stated that FX reforms will be critical for the Nigerian economy at this point, noting that trading activity in the Nigerian Fixed-Income and Interbank Currencies market was down by 55 percent due to economic slowdown linked to the COVID-19 pandemic.
All panellists in this first episode of the thought-leadership series pointed out that most investors were affected by the pandemic and are looking for further ways to diversify their portfolios that may end the year on a negative real return.
Speaking during the panel session, Ms Abiola Adekoya, a wealth expert and former CEO of RMB Securities, stated that one of the key things that investors are concerned about in this era is the need for diversification, more liquidity and higher investment returns.
“A lot of investors have been focused on one product and this pandemic has shown that that is not enough. The nascent interest in alternative assets have shown that there is strong liquidity in the overlooked retail space and investment managers should pay keen attention and develop alternative assets products, and reduce the reliance on the traditional fixed income, money markets and equities offerings,” she said.
Echoing Ms Adekoya’s thoughts on alternative assets was Ms Esiri Agbeyi, a partner and Head Private Wealth Services at PwC Nigeria, who emphasised the need for investors to take a keen interest in private equity and other alternative assets investments.
She shared a PWC survey on Family Offices. The survey revealed that 63 percent of family businesses leaned towards private equity as an investment portfolio. Local pools of private capital are important to drive economic development
On her part, the Divisional Head of Central Securities Clearing System (CSCS), Ms Onome Komolafe, stated the need for improved product development and differentiation, clear market segmentation and smart communication as tools that financial services firms can deploy in evolving with the changing consumer behaviour.
She also pointed to premium service delivery and technological innovation as crucial to democratization of investment opportunities in Africa.
The Group Executive, Treasury & Financial Institutions at First Bank, Mr Ini Ebong, pointed out the present opportunity available for investors, regulators, institutions, market practitioners to reset Nigerian financial market architecture. He noted that this opportunity presents itself mostly around periods of crisis.
According to him, as markets develop, the investing public becomes more able to embrace risk and go for higher return instruments outside traditional bank-based deposits.
“If you want high returns on investment, you must be willing to take on more risky investment products”, said Adetoun Dosunmu, Treasurer at FBN Merchant Bank. “Giving the highly specialized nature of investing, working with a regulated fund manager will be most beneficial to the investor in the long run and would protect against fraud and sharp practices from the teeming number of platforms offering untested investment opportunities”.
During his closing remark, the founder of Zedcrest Group and the chief host of the event, Mr Saheed Adedayo Amzat, called on the Nigerian capital market stakeholders to unite to further capital formation in the country. He sounded a note of warning to Nigerians on suspicious wealth generation platforms.
“Many unsuspecting investors over the last three decades have lost their funds to unregulated institutions that promised unbelievable returns.
“All stakeholders in the sector need to speak up and inform the unsuspecting public about investment platforms. Our regulators need to do more with the support of all players in the Investment management space,” he opined.
The much-anticipated event lived up to its billings as over 1,150 participants engaged the speakers on investment challenges and opportunities they can tap into post-COVID-19.
Zimvest, the newly launched Investment Management subsidiary of Zedcrest, plans to be at the nexus of a continuing conversation series around Investment management and economic policy landscapes. The second edition of the series is to be announced soon.
A poll conducted during the event also shows that over 60 percent of participants prioritized Capital Preservation when choosing an investment option.
Over 72 percent were concerned about inflation and exchange rate fluctuations and over 81 percent were concerned about Proven Track Record, Regulatory Compliance and Transparency when choosing an investment management partner. The session ended at exactly 1pm on the day.
A replay of this session can be watched via: https://zoom.us/rec/play/upcscbr–z83GtOSuQSDBqcvW9W0e6KsgCVI__dYy0yyWiNQNlShYbAaMLScQgqeV7fIjyl2RsrXPBOZ
By Modupe Gbadeyanka
The federal government, the 36 states of the federation and the 774 local government areas have received N1.727 trillion from the Federal Accounts Allocation Committee (FAAC) for December 2024.
The funds were disbursed to the three tiers of government from the revenue generated by the nation in November 2024.
At the December meeting of FAAC held in Abuja, it was stated that the amount distributed comprised distributable statutory revenue of N455.354 billion, distributable Value Added Tax (VAT) revenue of N585.700 billion, Electronic Money Transfer Levy (EMTL) revenue of N15.046 billion and Exchange Difference revenue of N671.392 billion.
According to a statement signed on Friday by the Director of Press and Public Relations for FAAC, Mr Bawa Mokwa, the money generated last month was about N3.143 trillion, with N103.307 billion used for cost of collection and N1.312 trillion for transfers, interventions and refunds.
It was disclosed that gross statutory revenue of N1.827 trillion was received compared with the N1.336 trillion recorded a month earlier.
The statement said gross revenue of N628.972 billion was available from VAT versus N668.291 billion in the preceding month.
The organisation stated that last month, oil and gas royalty and CET levies recorded significant increases, while excise duty, VAT, import duty, Petroleum Profit Tax (PPT), Companies Income Tax (CIT) and EMTL decreased considerably.
As for the sharing, FAAC disclosed that from the N1.727 trillion, the central government got N581.856 billion, the states received N549.792 billion, the councils took N402.553 billion, while the benefiting states got N193.291 billion as 13 per cent derivation revenue.
From the N585.700 billion VAT earnings, the national government got N87.855 billion, the states received N292.850 billion and the local councils were given N204.995 billion.
Also, from the N455.354 billion distributable statutory revenue, the federal government was given N175.690 billion, the states got N89.113 billion, the local governments had N68.702 billion, and the benefiting states received N121.849 billion as 13 per cent derivation revenue.
In addition, from the N15.046 billion EMTL revenue, FAAC shared N2.257 billion to the federal government, disbursed N7.523 billion to the states and transferred N5.266 billion to the local councils.
Further, from the N671.392 billion Exchange Difference earnings, it gave central government N316.054 billion, the states N160.306 billion, the local government areas N123.590 billion, and the oil-producing states N71.442 billion as 13 per cent derivation revenue.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.65 per cent gain on Friday, December 13, boosted by three equities admitted on the trading platform.
On the last trading session of the week, Okitipupa Plc appreciated by N2.70 to settle at N29.74 per share versus Thursday’s closing price of N27.04 per share, FrieslandCampina Wamco Nigeria Plc added N2.49 to end the session at N42.85 per unit compared with the previous day’s N40.36 per unit, and Afriland Properties Plc gained 50 Kobo to close at N16.30 per share, in contrast to the preceding session’s N15.80 per share.
Consequently, the market capitalisation added N6.89 billion to settle at N1.062 trillion compared with the preceding day’s N1.055 trillion and the NASD Unlisted Security Index (NSI) gained 19.66 points to wrap the session at 3,032.16 points compared with 3,012.50 points recorded in the previous session.
Yesterday, the volume of securities traded by investors increased by 171.6 per cent to 1.2 million units from the 447,905 units recorded a day earlier, but the value of shares traded by the market participants declined by 19.3 per cent to N2.4 million from the N3.02 million achieved a day earlier, and the number of deals went down by 14.3 per cent to 18 deals from 21 deals.
At the close of business, Geo-Fluids Plc was the most active stock by volume on a year-to-date basis with a turnover of 1.7 billion units worth N3.9 billion, followed by Okitipupa Plc with the sale of 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.3 million units sold for N5.3 million.
In the same vein, Aradel Holdings Plc remained the most active stock by value on a year-to-date basis with the sale of 108.7 million units for N89.2 billion, trailed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with a turnover of 297.3 million units worth N5.3 billion.
By Adedapo Adesanya
The Naira appreciated further against the United States Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by N1.50 or 0.09 per cent to close at N1,533.00/$1 on Friday, December 13 versus the N1,534.50/$1 it was transacted on Thursday.
The local currency has continued to benefit from the Electronic Foreign Exchange Matching System (EFEMS) introduced by the Central Bank of Nigeria (CBN) this month.
The implementation of the forex system comes with diverse implications for all segments of the financial markets that deal with FX, including the rebound in the value of the Naira across markets.
The system instantly reflects data on all FX transactions conducted in the interbank market and approved by the CBN.
Market analysts say the publication of real-time prices and buy-sell orders data from this system has lent support to the Naira in the official market and tackled speculation.
In the official market yesterday, the domestic currency improved its value against the Pound Sterling by N12.58 to wrap the session at N1,942.19/£1 compared with the previous day’s N1,954.77/£1 and against the Euro, it gained N2.44 to close at N1,612.85/€1 versus Thursday’s closing price of N1,610.41/€1.
At the black market, the Nigerian Naira appreciated against the greenback on Friday by N30 to sell for N1,650/$1 compared with the preceding session’s value of N1,680/$1.
Meanwhile, the cryptocurrency market was largely positive as investors banked on recent signals, including fresh support from US President-elect, Mr Donald Trump, as well as interest rate cuts by the European Central Bank (ECB).
Ripple (XRP) added 7.3 per cent to sell at $2.49, Binance Coin (BNB) rose by 3.5 per cent to $728.28, Cardano (ADA) expanded by 2.4 per cent to trade at $1.11, Litecoin (LTC) increased by 2.3 per cent to $122.56, Bitcoin (BTC) gained 1.9 per cent to settle at $101,766.17, Dogecoin (DOGE) jumped by 1.2 per cent to $0.4064, Solana (SOL) soared by 0.7 per cent to $226.15 and Ethereum (ETH) advanced by 0.6 per cent to $3,925.35, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
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