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FMDQ Re-Echoes Commitment to Deepen Nigerian Financial Markets

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FMDQ Platform

By Dipo Olowookere

Vice President of Capital Markets Directorate at FMDQ, Ms Tumi Sekoni, has reiterated the OTC Exchange’s commitment to support and deepen the Nigerian financial markets by steadfastly availing its platform for the efficient registration, listing, quotation and trading of securities.

Ms Sekoni gave this assurance on Monday at a ceremony held to celebrate the listing of the Stanbic IBTC Dollar, Money Market and Bond Funds (SIAML Funds) on the FMDQ trading platform.

The SIAML Funds, which are open-ended Funds, are set to enable investors achieve competitive returns on their assets while safeguarding capital, by investing in low risk short-term securities, high quality government bonds and dollar denominated securities domiciled in Nigeria.

This is part of FMDQ’s vision of being a debt-capital focused securities exchange, championing and supporting market-driven initiatives aimed at providing liquidity and facilitating growth and development in the Nigerian financial markets.

Speaking further, Ms Sekoni commended the Fund Manager on the strong and consistent performance of the Funds and on taking the prudent and strategic decision to list the Funds on FMDQ’s platform.

In FMDQ’s typically unique and impressive fashion, the ceremony was marked by memorable highlights which included, amongst other activities, the signing of the FMDQ Fund Listing Register by the Fund Manager, sponsor of the Funds on the OTC Exchange and FMDQ; the unveiling of the FMDQ Scrolls in favour of the Fund Manager and sponsor; and the special autograph impression by the Fund Manager.

On her part, Mrs Bunmi Dayo-Olagunju, Chief Executive, Stanbic IBTC Asset Management Limited, during the Fund Manager’s special address, said, “Considering the volatility in the equities and commodity markets, it is imperative for investors to diversify their portfolios by investing in Mutual Funds and other investment vehicles.”

The attractiveness of Mutual Funds or collective schemes, she said, “is derived from the numerous benefits they offer over other investment vehicles, such as flexibility, liquidity, steady returns, professional management and risk reduction, among others”

Speaking on behalf of the FMDQ Registration Member (Listings) and sponsor of the Funds on FMDQ, Mr Kobby Bentsi-Enchill, during his remarks, noted that Stanbic IBTC Capital Limited had sponsored many listings on FMDQ’s platform. He commented that Stanbic IBTC was excited with the remarkable growth of the fixed income market as this was vital to the creation of liquidity and pledged that the organisation will continue to work with regulators and operators to establish a world-class capital market in Nigeria.

“As a Registration Member (Listings) of FMDQ, Stanbic IBTC Capital Limited is also pleased to have supported the listing of the Stanbic IBTC Bond Fund, Stanbic IBTC Dollar Fund and of course, the Stanbic IBTC Money Market Fund which is the largest open-ended mutual Fund in Nigeria,” he said.

Mr Bola Onadele, Managing Director/CEO of FMDQ, commenting on the SIAML Funds, applauded the Fund Manager for its impressive performance in the market and stated that FMDQ remained unflinchingly committed to developing the Nigerian financial markets through its highly efficient platform, promoting unrivalled world-class standards to drive transparency, governance and liquidity, among others, in the markets.

He commented that the Funds, among which was the largest open-ended mutual Fund in the nation, having availed on FMDQ’s world-class listing service, would benefit from improved credibility, as continuous disclosure of all relevant information to do with the Funds was made available to a wide range of investors.

The benefits availed the Funds listed on FMDQ, would also, by extension accrue to the Fund Manager.

Also present at the event were Stanbic IBTC Asset Management Limited, represented by its Chief Executive, Mrs Bunmi Dayo-Olagunju; key representatives from Stanbic IBTC Nominees Limited and investors to the Funds – South Atlantic Petroleum Limited, YOA Insurance Brokers, Nigerian Agip Closed PFA Limited, Chevron Closed PFA Limited, amongst others.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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Economy

The Importance of Financing a Sustainable Future

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Sustainable Energy Project

By Sunil Kaushal

While climate change may have taken a back seat in a news cycle dominated by COVID-19, war and the cost-of-living crisis, the risks and threats associated with our warming planet remain the biggest long-term threat to our combined economic future.

Banks and financial institutions will be critical to managing that risk this includes financing of sustainable infrastructure, supporting transition and investing in green innovation. In fact, the banking industry has a responsibility to bridge top-down and bottom-up approaches to net-zero and help the public and private sectors realise the vast opportunities the energy transition and the move to sustainable infrastructure promises.

We can do that by providing capital to finance the investment in renewables, climate adaptation technologies and the transition to a ‘circular economy’ which encourages sustainable use of resources.

According to EY, financial institutions recognise that the transition to net zero will involve more than investments and underwriting for “green” assets and businesses such as renewables and electric vehicles. To achieve net zero across the whole economy, legacy carbon-intensive assets and companies will require financing to help them transition to a cleaner future.

For businesses, this means a fundamental change to operations, and that, in turn, requires capital. Insurers, lenders and investors will play a crucial role in making that capital available and in incentivising and supporting their clients and investees as they make their transitions.1

While stimulating growth through investment in roads, buildings and power supplies isn’t a new strategy, now it offers an opportunity to redefine the traditional playbook and focus on investing and financing sustainability for the longer term.

Creating sustainable and climate-friendly infrastructure will, however, require finance that is fit for the future. There is a growing concern, for example, around stranded asset risk – particularly for long-term investments such as infrastructure. Infrastructure projects need to consider risks 10 years and beyond into the future, many of which may not be immediately apparent. These risks include rising sea levels, increasing temperatures, drought, and coastal erosion. There are also financial and economic risks associated with making investments outside an ESG framework, this includes changes to regulatory settings that may disadvantage or penalise these investments.

Projects that are climate adapted from the outset reduce some of these risks and are more likely to stand the test of time, so banks will need to take into account the potential climate risks over the lifespan of the project to ensure resilience and protect investments.

Sustainable infrastructure projects, however, are traditionally more difficult to make bankable. With a bit of thinking, though, there are usually profitable solutions. For example, in a renewable energy plant, you have clear cash flows linked to the price of generated energy or for an energy efficiency improvement project, you have energy savings which can be translated into cost savings, and they can repay the financing.

At Standard Chartered, we are committed to playing our part in supporting sustainable projects in the region. We take a firm stand in accelerating to net zero by helping emerging markets in our footprint reduce carbon emissions as fast as possible and without slowing development, putting the world on a sustainable path to net zero by 2050.

Sustainability has long been a core part of our strategy, and we have committed USD40 billion of project financing services for sustainable infrastructure and USD35 billion of services to renewables and clean-tech projects by the end of 2024. We have also committed to catalysing $300 billion in sustainable investments by 2030. The projects we finance will trade and growth and contribute to a better quality of life through sustainable development.

The need for action from finance providers is to not only decarbonise their own balance sheets but also to help businesses in the real economy move towards a sustainable future. A successful net-zero transition must be just, leaving no nation, region or community behind and, despite the hurdles, action needs to be swift. To meet the 2050 goal, we must act now, and we must act together: companies, consumers, governments, regulators and the finance industry must collaborate to develop sustainable solutions, technologies and infrastructure.

Sunil Kaushal is the CEO of Standard Chartered Africa and Middle East (AME)

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Economy

NGX, Stakeholders to Discuss Ways to Improve Liquidity, Long Term Value

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improve liquidity

By Aduragbemi Omiyale

A roundtable aimed to bring together stakeholders in the Nigerian capital market for a discussion on ways to enhance the listing experience, deepen the markets, improve liquidity and identify institutional and capacity-building initiatives needed to develop the market and create long-term value for stakeholders will take place on July 7, 2022.

This event is being hosted by the Nigerian Exchange (NGX) Limited and will have in attendance the Minister of Industry, Trade, and Investment, Mr Adeniyi Adebayo; the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed; and the Director-General of the Securities and Exchanges Commission (SEC), Mr Lamido Yuguda; among others.

The programme called the NGX CEO Roundtable and requires registration is themed Creating the Enabling Ecosystem for Accessing Capital from the Nigerian Capital Markets and will hold virtually from 10:00 am.

A statement from the bourse disclosed that the roundtable will bring together advisers, policymakers, issuing houses, trading license holders, CEOs of NGX listed companies, and other stakeholders to discuss issuers’ concerns regarding the pre and post-listing requirements and other rules impending the process for raising equity on the stock exchange.

“As an agile exchange, NGX is committed to enhancing the competitiveness of the Nigerian capital market as a global investment destination.

“This year’s CEO Roundtable provides an opportunity for engagement between the Exchange and its stakeholders, with a view to enhancing the listing experience; deepening the markets; improving liquidity and identifying institutional and capacity-building initiatives needed to develop the market and create long-term value for stakeholders,” the Divisional Head of Capital Markets at NGX, Mr Jude Chiemeka, said.

He also noted that the event will encourage deliberations on Initial Public Offerings (IPOs) which have experienced a decline both locally and internationally in recent times.

The capital market expert further stated that the roundtable will speak to the emerging greenfield opportunities in the technology sector as it will provide capital-raising insights for fast-growing tech companies across major markets in Africa.

The NGX CEO Roundtable is a platform that ensures continuous dialogue with key stakeholders and provides strategic solutions to economic issues for follow-up implementation by the bourse in its capital market advocacy role.

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Economy

Inflation Menace Targets Transportation Fares

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transportation fares

By Lukman Otunuga

Earlier, we discussed how rising inflation was a ticking time bomb and a growing threat to Nigeria’s fragile economic outlook.

At 17.71%, the country’s annual inflation rate is certainly on a rise, thanks to soaring food and diesel prices.

This month, it was reported that the main ingredient for making Akara jumped a whopping 32% in May while the price of peanut oil surged 47% in the same period. Such a development is bad news and could make this breakfast snack unaffordable for some.

The inflation beast has now set its sights on transportation fares despite the billions of dollars pumped into fuel subsidies to cap prices and cool public dissatisfaction over the higher cost of living.

In an unfavourable development, the average cost of transportation has increased 46% to N582 a trip in May compared with a year earlier. Given how prices have jumped despite Nigeria spending a whopping N1.49 trillion subsidising gasoline in the first four months of 2022, things could get messy as inflation takes no prisoners. Global oil prices surged to multi-year highs thanks to geopolitical risks but Nigeria has been unable to cash in due to poor infrastructure, low production, and fuel subsidies.

This horrible combination places the economy under threat of rising inflationary pressures potentially leading to higher interest rates from the Central Bank of Nigeria (CBN).

Lukman Otunuga is a Senior Research Analyst at FXTM

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