US Institutional Investors Eye Nigerian Capital Market, Urge Regulatory Reforms

In a significant development, institutional investors hailing from the United States, gathered under the banner of the Institutional Investor Network, have expressed a keen interest in expanding their involvement in the Nigerian capital market.

This endeavor reflects a promising avenue for enhanced cooperation and investment between the United States and Nigeria. The endeavor was the focus of a substantive discussion, spearheaded by the Nigerian Exchange Limited (NGX), and was facilitated by Chapel Hill Denham, with the delegation from the United States composed of prominent entities such as the United States Agency for International Development (USAID), Prosper Africa, and Power Africa.

The culmination of this engaging dialogue was marked by a Closing Gong Ceremony, symbolizing the aspiration for collaboration and progress in the realm of international investment.

During this gathering, Alhaji (Dr) Umaru Kwairanga, Chairman of Nigerian Exchange Group Plc (NGX Group), voiced his conviction about the potential for deeper collaboration between the United States and Nigeria. He underscored several key areas where NGX Group has been actively engaging with the Nigerian government to foster the development of the capital market.

These initiatives encompassed the removal of capital controls, legislative measures aimed at enhancing the appeal of listings, comprehensive pension reforms, policymaking to streamline dollar-denominated market transactions, and the establishment of a private market. In his words, “Significant opportunities for mutual economic expansion abound between the United States and Nigeria,” culminating with a resounding affirmation that NGX Group is well-positioned to facilitate an influx of investments from the United States.

Temi Popoola, the Chief Executive Officer of NGX, expounded on the innovative endeavors undertaken by the Exchange to catalyze capital formation, both for foreign and domestic investors. He emphasized the collaborative efforts with the government to create a conducive environment for listings and product innovation geared towards channeling additional funds into the market. Notable among NGX’s strategic initiatives are the Technology Board, designed to encourage listings from burgeoning tech startups, and digital market access, a pioneering avenue aimed at igniting the younger generation of Nigerians’ interest in market investments.

Cameron Khowsroshahi, the Senior Investment Advisor at Prosper Africa, played a pivotal role in leading the US delegation to Nigeria. He conveyed the openness of U.S. institutional investors to collaborate with their Nigerian counterparts, including pension funds, to explore new avenues for investment within the Nigerian capital market. Khowsroshahi offered valuable insights into the regulations governing U.S. pension funds, wherein they are permitted to allocate a significant portion of their capital, typically ranging from 60 to 75%, into equities and equity-focused funds. In this context, he called upon Nigerian stakeholders to engage with the pension regulator to enact measures that would enable pension funds to inject a larger share of their liquidity into the Nigerian equities market. The U.S. delegation representative also emphasized the need for a fresh chapter in the economic relationship between Africa and the U.S., highlighting the pivotal role that private capital from both sides could play in devising sustainable solutions for Nigeria and the broader African continent.

Adding to the discourse was Mr. Bolaji Balogun, the CEO of Chapel Hill Denham, who expressed his optimism that the Nigerian market could emulate the U.S. market, particularly in terms of mitigating risk aversion towards investing pension funds in equities. His sentiments underscore the aspiration for Nigeria’s capital market to evolve and embrace a more dynamic and risk-tolerant approach, akin to the practices observed in the United States.

This high-level engagement and the expressed interest of U.S. institutional investors hold the promise of strengthening the Nigerian capital market and fostering mutually beneficial collaborations between the United States and Nigeria. The dialogue reflects a shared aspiration to encourage greater investment in the Nigerian market, spurring economic growth and enhancing the financial landscape for both nations.