According to the Nigerian Exchange Limited (NGX), increasing stock liquidity and luring the required investments to the Nigerian capital market can be accomplished through data democratization and environmental, social, and governance (ESG) compliance.
Jude Chiemeka, Divisional Head, Capital Markets at Nigerian Exchange Limited (NGX), participated in a panel discussion titled “ESG and Sustainable Finance: the Future of Investments” that was held in Lagos over the weekend and was co-sponsored by the Securities and Exchange Commission (SEC) and the Financial Centre for Sustainability.
The ability of information in a digital format to be available to the typical end user is known as data democratization.
Data democratization aims to make it possible for non-specialists to collect and analyze data on their own without the need for outside assistance.
Chiemeka emphasized the exchange’s strong focus on technology, which makes it easier for investors to obtain crucial data, while emphasizing that NGX is a member of the Sustainable Stock Exchanges Initiative. He contends that easy access to a variety of capital market products is essential, particularly for ordinary investors.
Data dependence in decision-making and engagement in the capital markets has been on the rise. The use of market data as a tool for making wise financial decisions is on the rise everywhere, and this trend is also seen in Nigeria.
According to a 2020 Refinitiv poll, 57% of capital markets professionals anticipate spending more time analyzing data, and 74% think that data analysis would be the most crucial talent needed to work on the futures trading desk.
In addition, Chiemeka asked investors to choose businesses that provide clear and excellent disclosures and adhere to ESG standards. He emphasized the strong link between company success and ESG reporting.
“Companies on the Exchange that demonstrate strong ESG compliance often gain access to more capital, attract a broader investor base, and can even raise capital from foreign markets.”
“The NGX Premium Board features companies that adhere to international best practices on corporate governance and meet NGX’s highest standards of capitalisation and liquidity. Compliance is not only a matter of prestige but also an indicator of sustainable growth, making these companies more appealing to both international and domestic investors”.
In addition, Chiemeka praised the Securities and Exchange Commission (SEC) for its initiatives to create a framework for sustainable financing, particularly in relation to green bonds.
“Nigeria’s issuance of a green bond solidified its position as the first sovereign country in Africa to do so, and we applaud the SEC’s role in making this possible”, he claimed.
Additionally, Tinuade Awe, CEO of NGX RegCo, said at a panel discussion on “ESG and the Nigerian Business Environment” that businesses who successfully integrate ESG frameworks into their company operations are seen as good corporate citizens. Such businesses, according to her, can reduce operational risks, draw dependable investors, and create lasting value.
She stated that putting more emphasis on the application of important national and international ESG-related rules will enhance Nigeria’s ESG performance and standing internationally. Awe asserted that this would also ensure its commitment to international development initiatives like the Paris Agreement and the Sustainable Development Goals (SDGs) of the United Nations.
She claims that in order for Nigeria’s public and private sector stakeholders to accept their responsibilities and contribute to the creation of a sustainable future, a strategic cooperation is necessary given the fast changing global ESG landscape.
This, according to her, may be done by making sure that their approach to dealing with ESG-related risks and opportunities, as well as their commitment to sustainable development, is done in a more open manner.
Awe emphasized the necessity for the Nigerian government to adopt measures that quicken the transition to mandatory reporting on significant ESG- and climate-related-issues.
