In this interview with BAMIDELE FAMOOFO, the outgoing President and Chairman of the Council of Chartered Institute of Stockbrokers, Oluwole Adeosun, discusses a range of issues in the economy and the market, including the proposed recapitalization of banks, and some tips on the landmark achievements of the Institute, during his stewardship as the 12th President and Chairman of Council. Excerpts:
How would you describe the Nigerian Capital Market at the moment?
The market is vibrant. It has not only fully recovered from the 2008 global shock, but has become one of the solid pillars of economic recovery in the country.
Investor confidence is significantly restored, even though we still expect more faith from our local investors.
Market regulation has been substantially tightened, and you hardly get to hear of market infractions anymore. Compared to 2010, which was 14 years ago, the Nigerian capital market has witnessed monumental expansion.
We have five thriving securities exchanges in the country now, in contrast to only one back then, and three of these are commodities exchanges, which we didn’t have before.
The equities market has been on an upward trajectory since the entry of the new administration in Nigeria, due to proactiveness in implementing necessary reforms such as the removal of fuel subsidies and the liberalization of the foreign exchange market.
The Nigerian stock market recorded significant growth as the All-Share Index successively broke barriers at 70,000 points in October 2023 and crossed the historic 100,000 mark in January 2024.
The bourse emerged as the world’s best-performing stock market in the first three weeks of 2024 and the number-one exchange in Africa in the first two months of 2024.
The fixed-income securities market has so blossomed that Nigeria is arguably the leading debt capital market today in Africa. Investment products have increased and investors today can seamlessly choose between traditional equities, mutual funds, exchange-traded funds, fixed-income securities and derivatives amongst others. In terms of professional development, the Chartered Institute of Stockbrokers has implemented specialized qualifications and shifted examinations to remote settings.
Nigerian stockbrokers now have a seamless path to practice in advanced countries due to the institute’s international collaborations.
In summary, the current leaders shaping Nigeria’s financial system—the Minister of Finance and Coordinating Minister of the Economy, along with the Governor of the Central Bank are seasoned members of our Institute. Their extensive experience and the commendable work they’ve undertaken underscore the calibre of professionals the institute produces.
“To entice Millennials, Gen Z, and Gen Alpha under the recapitalization programme, banks must adopt a multi-faceted approach that resonates with the preferences and values of these diverse generations”
The Central Bank of Nigeria has directed banks to recapitalize in the next 24 months in line with their individual level of authorization. What was your immediate reaction to this announcement against the backdrop of the last banks’ recapitalization in Nigeria?
The action of the Central Bank of Nigeria was both necessary and overdue, especially when considered in the context of global trends.
The developmental needs of Nigeria have substantially increased since the last banking recapitalization exercise that was initiated about 20 years ago.
The country’s populations as well as the serviceable market for financial transactions have substantially grown with the advent of the African Continental Free Trade Area. Nigeria must enhance and modernize its financial system to stay competitive. Various external and domestic factors have significantly impacted the Nigerian economy, necessitating an increase in minimum capital requirements for banks. This measure aims to fortify their capital base, enabling them to absorb unforeseen losses and sustain their role in fostering the growth and development of the Nigerian economy as we aim for the one trillion dollar economy achievable by 2026.
Can you advise on other capital raising methods that can equally assist the banks to meet up, particularly Public Offers?
From a strategic standpoint, engaging in a Public Offer can significantly elevate the bank’s visibility and reputation within the market landscape.
This move has the potential to attract fresh investors, thereby amplifying its market capitalization. With an augmented capital base, the bank gains enhanced financial prowess and adaptability to seize growth prospects and extend its footprint. Leveraging Public Offers grants banks access to a vast reservoir of potential investors, facilitating the swift accumulation of substantial capital. Moreover, it ensures transparency and regulatory adherence, as banks must conform to stringent disclosure standards mandated by regulatory bodies such as Nigeria’s Securities and Exchange Commission. This transparency not only fosters investor trust but also solidifies the issuing bank’s credibility.
In addition to Rights Issues and Public Offers, Nigerian banks can diversify their capital-raising strategies by exploring avenues such as Private Placements or Strategic Investments from institutional investors. These alternatives furnish banks with supplementary pathways to fortify their capital base and advance their growth objectives within the dynamic Nigerian capital market milieu.
Many banks are already preparing to float rights issues to recapitalize as well as deploying various options for capital injection. What are these options and their implications?
It is logical, and the right thing to do. Businesses would naturally want to give their existing shareholders the privilege of enhancing their shareholdings, before reaching out to outsiders. If the Rights Issue succeeds, it means that the company was able to raise capital without changing the shareholding structure or diluting the proportionate stake of existing shareholders who choose to participate in the offering.
Nevertheless, past occurrences suggest that following the Rights Issues, numerous companies may opt for a public offering to raise additional capital and attract more shareholders.
This trend is especially probable given that many Nigerian banks have expanded into international markets, necessitating substantial capital to operate on a larger scale.
How can the banks attract Millennials, Gen Z and Gen Alpha under the recapitalization programme?
To entice Millennials, Gen Z, and Gen Alpha under the recapitalization programme, banks must adopt a multi-faceted approach that resonates with the preferences and values of these diverse generations.
Banks should prioritize digital innovation and convenience. Millennials, Gen Z, and Gen Alpha are digital natives who prefer seamless online experiences and mobile banking solutions. By investing in user-friendly mobile apps, banks can cater to the tech-savvy preferences of these generations.
This happened three years ago when a major telecommunication company did its Initial Public Offering in Nigeria. Emphasizing sustainability and social responsibility can appeal to younger generations.
Millennials, Gen Z, and Gen Alpha are known for their environmental and social consciousness.
Banks can attract them by aligning with sustainable practices, such as offering green investment options, supporting community development projects, and promoting financial literacy initiatives.
Moreover, personalized, and customized services are essential for engaging younger customers.
Banks can leverage data analytics and AI technologies to offer tailored financial products and services that meet the unique needs and preferences of Millennials, Gen Z, and Gen Alpha.
Personalized recommendations, budgeting tools, and educational resources can enhance their banking experience and foster long-term loyalty.
Furthermore, transparency and authenticity are key factors in building trust with younger generations.
Banks should communicate openly about their values, fees, and policies to establish credibility and integrity.
Engaging in transparent communication through social media channels, blogs, and community events can help banks connect with Millennials, Gen Z, and Gen Alpha on a deeper level.
The Chartered Institute of Stockbrokers is said to have achieved some significant developments in recent times. Could you mention some of them?
That is correct. The CIS has contributed its quota to the resurgence and development of the Nigerian capital market in the last decade, and we have to thank all our Past Presidents, Governing Council Members and Management for the commitment and immense work that they all put in.
For the sake of time and space, however, I restrict my answer to some of the developments in the last two years when we recorded new membership intakes, new Fellows and new Life Members.
The profile of the Chartered Institute of Stockbrokers has risen very fast, and as I said, it is an accumulation of work done by the past and present Councils and Office Holders.
The National Universities Commission has approved the Benchmark Minimum Academic Standard for Securities and Investment / Capital Market Studies in the country.
Full remote (online) examinations for all our Level 1 Professional Examinations, as well as Diploma students, including those in the Diaspora, have been successfully introduced.
We now have a full-fledged training arm, CIS Academy, and last year, CIS Academy held two high-profile executive courses in collaboration with the Lagos Business School.
The first official district society of the Chartered Institute of Stockbrokers, the FCT & Northern Zone District Society was inaugurated in December 2023.
The institute now has a world-class electronic library in place. Perhaps our greatest area of achievement has been in advocacy. We held a high-impact national workshop in Abuja and the Annual Stockbrokers Conference in Abeokuta.
In 2022 the conference was hosted by the Edo State Government in Benin City. The CIS secretariat in the last year, has hosted several important visitors who came on courtesy visits and these include the Securities and Exchange Commission, the Nigeria Exchange, Pension Fund Administrators Association, CISI United Kingdom and the Central Bank of Gambia, to mention a few.
Please note also that CIS has leveraged its unique position as the chartered body in the industry to rally other stakeholders for joint discussions on submissions on key industry matters like margin lending, Capital Gains Tax and so on, as the needs arise.
For the first time in the history of Nigeria, stockbrokers have been appointed the Minister of Finance and Co-ordinating Minister of Economy as well as the Governor of the Central Bank. What does this mean to the Institute and what is your advice to the duo?
It is a testament to the rich intellectual content of CIS’ membership and the growing profile of the institute, that its members currently hold the two most important positions in the Nigerian financial system, and probably the entire economy as well.
The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, FCS, is a well-known and long-standing member of CIS.
Similarly, Mr. Olayemi Cardoso, FCS, the Governor of the Central Bank of Nigeria is also a Fellow and long-standing career member of the institute.
It is important to draw your attention to the fact that these two gentlemen were appointed because they had been tried and tested, and passed the test of excellent performance.
They both worked with President Bola Tinubu when he served as the Governor of Lagos State and performed satisfactorily. Secondly, both are stockbrokers-cum-bankers. They have full and comprehensive knowledge of the entire financial system, not just one segment as we had with others in the past.
So, it bodes well for the country. In fact, as you can see, there has been seamless synergy between the money and capital markets since they took over, and the economy is the better for it.
My advice to the two city gentlemen is that they continue to abide by our dictum: My Word is My Bond. Trust and Integrity have always been our watchwords, and we are confident that Edun and Cardoso will always live by the dictum.
Secondly, the gap between the money market and capital market in Nigeria is abnormally wide, in terms of development and utilisation. So, they should do their best to develop the capital market and create a fair balance in the utilisation of both markets, so that the overall performance of the Nigerian economy can be faster and greater.
What would you like to be remembered for as a Past President of the Institute?
I have always worked with my team in the Governing Council and we put in our very best to maintain the pace of growth and development set by our predecessors to project the image of the Institute to significantly higher levels (Pan-Nigeria and internationally) new partnerships and collaborations established.
I think I will always cherish the rich memories of the CIS@30 celebrations which were held in two phases between November 2022 and February 2024.
The project was historic with a grand set of events to commemorate the 30th anniversary of the establishment of our Institute.
The extensive array of events provided by the CIS@30 project offered the Institute a rare opportunity to further enhance its brand value, and attract immense goodwill. The project on its own created so many milestones for CIS.
“My advice to the two city gentlemen is that they continue to abide by our dictum: My Word is My Bond. Trust and Integrity have always been our watchwords, and we are confident that Edun and Cardoso will always live by the dictum”
Our Christian and Muslim members held thanksgiving services, to appreciate God for his guidance. For the first time ever, Closing Gong ceremonies were held within a week at four different securities exchanges in Nigeria, in celebration.
The Institute formally invested Dr. Goodie Ibru, HFCS, Alh. Aliko Muhammed, HFCS, Gen Ibrahin Babangida (Rtd), HFCS, and Chief Chris Ogunbanjo, HFCS, Mr Mustafa Chike-Obi HFCS and Mr. Aigboje Aig-Imoukhuede, HFCS as Honorary Fellows of the Institute.
As part of CIS@30, the Institute staged her first awards ceremony in about a decade where merit awards were awarded to all the Past Presidents of the Institute, our financial partners, and the eight personalities that visited the President of the Federal Republic of Nigeria in 1992 and succeeded in obtaining the charter.
The History of the Nigerian Capital Market (book and documentary) project was successfully written and launched, as part of the CIS@30 celebrations.
The book is based on the first-hand memories of the then Doyen of Stockbrokers (now Late) Otunba Olasubomi Balogun, the most senior Past President, Mr. Olutola Mobolurin, former long-serving Director General of The Nigerian Stock Exchange, Prof Ndi-Okereke-Onyuike FCS and other eminent personalities in the Nigerian capital market including the immediate Securities and Exchange Commission D-G, Lamido Yuguda.
We also achieved a lot of milestones in terms of internal operations and protocol, but those will be outlined in detail in the institute’s annual report and milestones compendium 2022-2024.
So, to the glory of God, I wish to thank my fellow officeholders, our team in the Governing Council, as well as management and staff for the various milestones achieved. I assure you that the institute will continue to soar even beyond these achievements.
What is next after you pass the baton to the incoming administration?
It has been two years of hectic public service on the professional front. While the baton is passed to the next president of the Institute with the orderly succession arrangements to continue the work he has been part of in the last four years of stepping into the presidential corridor, I will take some time off to rest and later continue in the role of Immediate Past President providing support for the new administration to conclude one or two unfinished projects of my tenure. Much more,
I will focus on my firm’s business full-time along with other service engagements.
