The Next Frontier for Africa’s Capital Markets Is Capital From Within, says Popoola

Temi Popoola, Managing Director and CEO of Nigerian Exchange Group (NGX Group), believes Africa's capital markets have the potential to leverage the capital already within the continent, rather than relying solely on external investments. Today, Africa's capital markets are largely organized on a national basis, with investors facing different regulatory frameworks, currencies, settlement systems, disclosure requirements, and distribution channels when seeking opportunities beyond their home markets. This can make accessing capital across borders more complex for companies.

To address these barriers, Popoola argues that the evolution of African capital markets should move towards greater connectivity and participation across the continent. Initiatives like the African Exchanges Linkage Project (AELP), a collaboration between the African Securities Exchanges Association (ASEA) and the African Development Bank, aim to improve access to securities across participating African markets. NGX Group, a major player in Nigeria's capital markets, is involved in this project.

The importance of this integration extends beyond simply connecting trading systems. It requires cooperation across regulation, brokerage, custody, settlement, market information, and investor protection. Technology is playing a role in making this ecosystem more accessible. In Nigeria, NGX Group has developed NGX Invest to expand channels for investors to participate in public offers and enable investment opportunities to reach investors through various financial institutions.

Nigeria's domestic institutional assets, digital distribution, and investor participation are expanding, prompting the question of how stronger market connections can enable African capital to participate more efficiently in opportunities across the continent. An example is the Dangote Petroleum Refinery and Petrochemicals public offer, which illustrates how a major African business can use the capital market to broaden ownership and mobilize long-term capital.

Popoola envisions a future where an African investor can look beyond their country's opportunities, while an African business can access capital beyond its domestic market. This would be particularly beneficial for sectors requiring substantial and patient funding, such as infrastructure, energy, manufacturing, technology, agriculture, and financial services.

The opportunity lies in connecting African savings with African enterprise, creating stronger connections between the two. This vision, however, is not about creating an already integrated continental market, but rather building the infrastructure to make this integration possible.