US institutional investors eye Nigerian capital market, urge regulatory reforms

Institutional investors from the United States under the Institutional Investor Network have expressed interest in allocating their capital and exploring more direct investment opportunities in the Nigerian capital market.

This fact came to the fore at an engagement between Nigerian Exchange Limited (NGX) and a delegation from the United States facilitated by Chapel Hill Denham, consisting of United States Agency for International Development (USAID), Prosper Africa and Power Africa. During the engagement, which was marked by a Closing Gong Ceremony, the Chairman, Nigerian Exchange Group Plc (NGX Group), Alhaji (Dr) Umaru Kwairanga called for a deeper collaboration between the US and Nigeria.

The Chairman highlighted areas in which NGX Group has been engaging the government to further develop the capital market including removal of capital controls; legislation to enhance attractiveness of listings, pension reforms, policymaking to facilitate dollar-denominated market transactions, and the establishment of a private market. “Significant opportunities for mutual economic expansion abound between the United States and Nigeria,” he said, concluding that NGX Group is positioned to facilitate more investment inflows.

Temi Popoola, the Chief Executive Officer, NGX, emphasised the innovative activities of the Exchange around catalysing capital formation by both foreign and domestic investors. “We are working hand-in-hand with government to create an attractive environment for listings and also on product innovation that can creatively channel more funds into the market.

Popoola also mentioned NGX’s technology innovations including the Technology Board to encourage listings from tech startups, and digital market access that will spur the younger generation of Nigerians to invest in the market.

On his part, Cameron Khowsroshahi, the Senior Investment Advisor, Prosper Africa, who led the US delegation to Nigeria stated the openness of US institutional investors in working with Nigerian institutional investors including pension funds to explore more avenues to invest in the Nigerian capital market. Whilst giving remarks, he noted that in the US, pension funds, some of whom were represented at the engagement, were allowed by regulation to invest 60 to 75% of their capital into equities and funds targeting equities.

Khowsroshahi urged the Nigerian stakeholders to work with the pension regulator to allow pension funds inject more of their liquidity into the Nigerian equities market. He also noted that there needs to be a new chapter in Africa and the U.S. economic relationship, adding that private capital from both sides play a pivotal role in achieving sustainable solutions for Nigeria and Africa.

Also speaking at the engagement was the CEO, Chapel Hill Denham, Mr Bolaji Balogun, who expressed hope that the Nigerian market will emulate the US market as regards lesser risk aversion to investing pensions in equities.

Photo caption:

L – R: Bolaji Balogun, Chief Executive Officer, Chapel Hill Denham; Natalie Alm, Communications Advisor, USAID INVEST; Temi Popoola, Chief Executive Officer, Nigerian Exchange Limited (NGX); Alhaji (Dr.) Umaru Kwairanga, Group Chairman, Nigerian Exchange Group; Cameron Khosrowshashi, Senior Investment Advisor, Prosper Africa; Nora Brown, Chief of Party, USAID INVEST; Phil Southwell, Partner, Chapel Hill Denham and Jude Chiemeka, Executive Director, Capital Markets, NGX during a US Investor Delegation to Nigeria Closing Gong Ceremony on Wednesday 11 October 2023 at NGX in Lagos.