The Chartered Institute of Stockbrokers (CIS) has issued a compelling call to action, urging the Federal Government of Nigeria to implement critical economic reforms to unlock the full potential of the nation’s capital market. This call, following a high-level workshop held at the State House Conference Centre in Abuja, emphasizes the pivotal role the capital market can play in achieving Nigeria’s ambitious $1 trillion economic target. The CIS argues that a robust and well-functioning capital market is essential for attracting investment, fostering economic growth, and driving national development towards this ambitious goal. Central to this call is the need for deliberate and coordinated actions to significantly deepen capital formation across all sectors of the Nigerian economy.
The CIS highlights several key areas requiring immediate attention. Firstly, the government must take the lead in fostering strategic coordination among various market players. This includes harmonizing fiscal, trade, and monetary policies to create a stable and predictable investment environment. Such harmonization will boost investor confidence, both domestic and foreign, and attract the long-term capital crucial for sustainable economic growth. The current volatility in foreign direct investment (FDI) inflows, attributed to currency risks, regulatory unpredictability, and persistent infrastructure gaps, underscores the urgency of these reforms. Similarly, the underutilization of domestic capital mobilized through pensions, insurance, and retail investors for industrial financing represents a significant missed opportunity that needs to be addressed through targeted policy interventions.
Furthermore, the CIS stresses the importance of integrating Nigeria’s large informal sector into the formal economy. This integration holds the potential to unlock significant domestic capital and broaden the tax base, providing much-needed resources for public investments. Coupled with this is the need for well-structured financial instruments designed to attract diaspora savings and remittances, a vast pool of capital currently under-utilized for national development. A comprehensive national savings strategy is also critical to effectively channel local savings into productive sectors of the economy. Prioritizing infrastructure development, particularly through public-private partnerships, is another key recommendation, as improved infrastructure is essential for attracting investment and supporting economic activity.
The CIS also places considerable emphasis on the role of regulatory reform and market innovation. It calls upon capital market regulators to leverage the upcoming International Standards on Auditing (ISA) 2025 to strengthen corporate governance, enhance disclosures, and improve dispute resolution mechanisms. These measures are crucial for building trust and transparency in the market, further boosting investor confidence. Market operators are similarly urged to innovate and diversify financial products to cater to a broader range of investor groups, including millennials, Gen Z, and Gen Alpha. This includes promoting instruments such as Real Estate Investment Trusts (REITs), venture capital funds, and long-term infrastructure funds to offer diverse investment avenues.
The workshop highlighted the need for targeted interventions across various asset classes. The Nigerian capital market, while showing promise, needs significant development across its various segments to effectively support the $1 trillion economic goal. This includes developing a robust fixed income market, deepening the equities market, and fostering the growth of alternative investment vehicles. Each of these segments requires specific policy interventions to address their unique challenges and unlock their potential.
The $1 trillion economic target represents a significant aspiration for Nigeria, requiring a concerted effort from all stakeholders. The capital market, with its capacity to mobilize and allocate capital efficiently, stands as a critical enabler of this ambition. By implementing the reforms recommended by the CIS, the Nigerian government can unlock the full potential of its capital market, transforming it into a powerful engine for economic growth and national development. This requires a holistic approach that addresses regulatory frameworks, market infrastructure, investor education, and product innovation, ensuring that the market is well-positioned to attract both domestic and international investment and drive sustainable economic progress.
