Nigeria to List Dollar Assets on Stock Market to Ease Forex Problems

Nigeria to List Dollar Assets on Stock Market to Ease Forex Problems

  • NGX plans on listing dollar-denominated bonds as a possible way to tackle FX issues
  • In addition, the bourse is partnering with the regional SEC to reform laws for companies to pay dividends in USD
  • Meanwhile, there is no particular time frame when the proposal may be implemented

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To facilitate foreign currency access for businesses in Africa's largest economy, Nigeria's stock exchange has proposed permitting dollar-denominated bond listings and possibly expanding this to equities.

Temi Pooola, the Chief Executive Officer of the Nigerian Exchange Ltd., said the company targets businesses that are based in the nation's special economic free trade zones and those that generate foreign cash.

stock exchange
Nigeria to list dollar assets on stock market to ease forex problems Credit: BBC, NGX
Source: UGC

This is amid report that the Nigerian economy is facing a severe shortage of foreign exchange as dollar inflows have dropped notably in recent months.

No timeframe for the new action yet

Popoola was unable to provide a timeframe for when the suggestions may be put into action, but noted that the government has demonstrated a strong interest in broad market changes.

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Bloomberg reported that in an interview, he claimed that it is possible to change listing regulations in a reasonably short period of time.

He said:

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.

Notably, Nigeria has loosened foreign exchange controls, terminated fuel subsidies that cost $10 billion last year, and begun reforming agriculture to reduce skyrocketing food inflation in addition to removing fuel subsidies.

Recall that reported that President, Bola Tinubu, stated that his administration will not continue with payment of fuel subsidy.

Along with listing and selling foreign currency bonds, the bourse is also working with the regional Securities and Exchange Commission to reform laws so that certain companies can pay dividends in US dollars, according to Popoola.

He said that given the proactive stance of the current administration, it is reasonable to anticipate that these objectives can be achieved, adding that both retail and institutional investors have substantial amounts of dollars that domestic capital markets can tap to encourage more local listings.

He said:

If the target companies cannot access dollars within our market, many of them may opt to list abroad.

CBN issues stern warning to banks involved in illegal sale of forex

The Central Bank of Nigeria (CBN) has issued a warning regarding potential repercussions for financial institutions involved in the illegal sale of dollars or unauthorised forex transactions, earlier reported

The warning follows the unfortunate decline of the Nigerian currency, the naira, against the dollar at official and unofficial markets.

Folashodun Shonubi, the acting Governor of the CBN, conveyed this message while delivering a lecture titled "Diaspora Remittances and Nigerian Economic Development" in Abuja.


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