By Aduragbemi Omiyale
The federal government and the Central Bank of Nigeria (CBN) have been urged to give priority to companies trading their stocks on the Nigerian Exchange (NGX) Limited in terms of access to foreign exchange (FX) to attract more firms to the bourse.
The chief executive of the exchange, Mr Temi Popoola, made this appeal at a recent event, noting that some organisations want to pay dividends to shareholders in Dollars but are unable to do so due to the forex liquidity crisis in the country.
At the moment, only a few companies on the domestic stock exchange pay their dividends in Dollars and they are mainly Seplat Energy, Airtel Africa and Airtel Africa.
Nigeria has suffered a shortfall in FX earnings because of its inability to produce more crude oil, its main source of forex earnings. This issue has put pressure on the Naira and has badly affected the economy.
But Mr Popoola believes if listed companies are accorded priority in their procurement processes, more firms will join the NGX.
“There are companies that would like to list on our exchange, but they earn in dollars, their revenue to their bottom line is in dollars.
“There are also listed companies that would like to pay their dividends in dollars. However, the current regulation does not allow that,” he said.
However, he assured that the NGX was working with the government to use the capital market to fix government problems which enabled the execution of dollar-denominated transactions on NGX can address forex illiquidity.
The capital market expert noted that the bourse was excited with the new change in administration and its renewed hope agenda as it presents an opportunity to work with market stakeholders, including the regulators to address the challenges faced by the government and listed corporates.
“We are working with regulators and policymakers to try to address that because this would create a lot more benefit to the government which is looking for FX resolutions to their challenges.
“We believe this will also unlock the dollars that people have saved in domiciliary accounts to be put into useful work in the capital market and economy,” he stated.
He emphasised that increased listings would boost government revenue, citing the transparency, higher tax contributions, and better governance exhibited by listed companies.
Mr Popoola highlighted the historical role of government support in facilitating the presence of many companies currently listed on the exchange.
