The President of the Nigerian Stock Exchange (NSE) has said that plans for the automation and introduction of e-IPO in the bourse are still ongoing. The President of the NSE, Mr Abimbola Ogunbanjo made this known during the 22nd Chartered Institute of Stockbrokers, CIS, Conference themed ‘‘Evolution of the Nigerian Capital Market Structure: Exploring the Next Frontier for Growth” in Lagos last week.
The NSE had announced that it would introduce the electronic Initial Public Offering in the capital market in order to foster efficiency and effectiveness among market operators.
With the spate of technology and the high level of digitization in major industries across the world, the NSE is also striving to join leading stock exchange markets using the e-IPO. “The NSE is in the process of introducing e-IPO platform which will help boost market participation and enhance liquidity in the market,” said Mr Abimbola Ogunbanjo.
Earlier this year, Mary Uduk, the acting Director General of the NSE announced plans to introduce an e-IPO in the capital market, but a few months later the project went silent.
During a press briefing in July, Uduk told the press that a committee on the full automation of the primary issuance process has been set up in order to fast-track the digitization process in the Nigerian bourse. The committee includes industry professionals in the SEC, Nigeria Stock Exchange (NSE); Association of Issuing Houses of Nigeria (AIHN); Association of Stockbroking Houses of Nigeria (ASHON); Central Securities and Clearing System (CSCS); Institute of Capital Market Registrars (ICMR); Capital market Solicitor Association (CMSA); Fund Managers Association of Nigeria (FMAN), and Nigerian Interbank Settlement System (NIBSS).
The e-IPO would have a wide-reaching impact on the NSE as more people will gain access and get involved during the floating of companies in the market. Through the platform, most investors will have unlimited access to IPOs in the stock exchange market. In Ghana, for instance, the country’s bourse recorded a huge success in the use of mobile money platform in IPOs in the country. Through that, more than 100,000 Ghanaian nationals could purchase MTN shares using an MTN-owned mobile money service, MoMo platform.
Capital market experts have also expressed optimism over the introduction of this new method which some say will boost activities in the market, catalyze the IPO process and quash the complexity involved in IPOs. However, many are still sceptical about its actualization due to the long silence of top officials in the capital market.
Since the Lagos Stock Exchange morphed to the NSE in 1977, the Nigerian capital market remained one of the leading markets in Africa, but, various constraints which include political instability have been major factors limiting its success over the years. Since 2016, no IPO has been recorded in the NSE which has culminated to zero activity at the primary market. Although, plans by telecommunications giant, MTN to break the long hiatus was botched after it got enmeshed in a series of controversies with the Nigerian government.
However, the adoption of the e-IPO may quickly change the fortune of Nigeria’s capital market. It will also strengthen activities in the NSE while boosting investor confidence.