NGX expresses optimism over FG’s readiness to tackle FX constraints

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The total transactions on the local bourse have hit N2.35trn at the end of May, indicating a 115.40 per cent increase compared to the first five months of 2023.

  • FX constraints reduced foreign investment by 38.5% in 15 years – Onyema

BY BAMIDELE FAMOOFO

The Nigerian Exchange Limited has said it is confident that the new administration will take efficient steps to address foreign exchange constraints, which have continued to challenge the nation’s economy.

Its Chief Executive Officer, Temi Popoola, stated this during the closing gong ceremony to commemorate the centenary anniversary of the International Court of Arbitration which was held in Lagos on Thursday.

While welcoming the ICC delegation to the Exchange, Popoola who was ably represented by the Divisional Head, Capital Markets at NGX, Jude Chiemeka, stated that the exchange is pleased with the growing number of domestic and foreign investors on its platform.

He noted that the NGX trades between $250 million and $300 million a day and added that this has declined owing to FX constraints.

“We are hopeful and we are beginning to see that the new administration wants to tackle FX constraints. At the NGX, we will continue to appreciate our partners. We are truly delighted to welcome the ICC to the exchange and at NGX, we will continue to build on partnerships just to ensure that companies will be able to come and raise capital,” Chiemeka said.

Responding, the Secretary General, ICC, John Denton, noted that the ICC with 400 million members in 170 countries, plays a critical role in ensuring appropriate advocacy with the government and global business community on effective means of enabling the private sector, provide training and capacity building to link Nigerian businesses unto the extraordinary global platform of the national chamber of commerce.

Denton said one of the key aims of the ICC is to enable global trade while expressing excitement that the market sustained a bullish tilt in three consecutive trading sessions.

According to him, this bodes well especially for investors’ confidence under the new administration and is critical to keeping the market competitive and transparent.

Commending the NGX for its giant strides in innovation and technology, Denton said this aligns with the ICC objectives, which is a critical part of its role in developing the private sector and enabling the private sector to operate effectively.

“We are looking at 30-40 sovereign states with serious debt and liquidity issues and yet on a global basis, that is dismissed as something to be worried about and not something to be acted on.

What that means is that the advanced economies are not prepared to work harder on the debt forgiveness issue, resolution issue because if these countries fall over, it will be terrible. We think this is fundamentally wrong and that is what we are working on. Working with a group like the NGX who understands what is required to keep the markets moving will be very helpful too,” the ICC Secretary General said.

Meanwhile, on the back of the new administration’s readiness to remove the fuel subsidy, unify exchange rates and ensure that investors and foreign businesses repatriate their hard-earned dividends and profits home, the Group Chief Executive Officer, Nigerian Exchange Group, Oscar Onyema, has expressed optimism that the nation’s economy will witness more investment flows.

Onyema disclosed that foreign transactions on the Exchange have decreased by 38.5 per cent from N616 billion in 2007 to N379 billion in 2022 owing to the FX constraints in the country.

Furthermore, foreign transactions accounted for about 16 per cent of the total transactions in the first four months of 2023 while total foreign transactions currently stand at N62.18 billion in the same period.

Onyema stated this during the 7th edition of the International Court of Arbitration Africa Conference on International Arbitration which was held in Lagos.

He said there is bound to be more investment flows in Nigeria.

“All these are the right noises for money. Money goes to the least resistant places where it can get the best risk adjustment returns without unnecessary hassles because there is competition across the globe.

“On what we have seen in the last eight years, there has been an outflow of foreign portfolio investments predominantly and more than half of our markets are outside of America, but with these policy changes, you can begin to understand why we are very optimistic that these flows will come back and with it, attract additional flows”, Onyema said.

When questioned about the promising signs of growth across Nigeria and Africa, he pointed out that the growing population of young entrepreneurs who are driving their business consistently, increased traction in the Fast-Moving Consumer Goods industry and the fact that Nigeria is one of the largest producers of oil.

“These signs point to where we have strength, this is where we have a competitive advantage in Africa and this is where we can start the journey to get more value-added output,” he noted.