Apparently concerned about the current scarcity of foreign exchange (FX) in the economy, the Nigerian Exchange Limited (NGX) is currently working on a proposal to allow dollar-denominated bond listings by investors on its platform.
A news report from Bloomberg indicates that the new initiative is considered by the NGX authorities, which are also dollar-denominated stock listings, as a potential solution to mitigate the FX scarcity being faced by companies in the country
The Chief Executive Officer (CEO) of Nigerian Exchange Limited, Mr. Temi Popoola, was quoted by Bloomberg as saying that the primary goal of the proposal is primarily to support special economic free trade zones’ (EFTZs) companies and other entities generating revenue in foreign currency.
He clarified: “Our primary objective is to enable these companies to issue bonds denominated in dollars and eventually offer equity in dollars as well. It could potentially address the challenges posed by fluctuations in foreign currency.”
Although the investment expert refrained from giving a specific timeline for the implementation of these proposals, he noted that the Nigerian government had shown a keen interest in broader market reforms.
In addition, Popoola hinted about the feasibility of effecting changes to listing regulations within a relatively short timeframe.
According to him, aside the proposed dollar-denominated listings initiative, the NGX boss explained that the Exchange was collaborating with the Securities and Exchange Commission (SEC) to amend the current regulations to also enable companies earning revenue in USD to distribute dividends in dollars.
He expressed optimism that given the proactive stance of the current administration, it is reasonable to anticipate that these objectives can be achieved.
Popoola anticipated that the proposed initiative would enable Nigeria to tap into huge reserves of dollars held by retail and institutional investors, thereby creating a more conducive environment for local listings.
