The Nigerian Exchange Limited is collaborating with the Central Securities Clearing System Plc and Euroclear to create a dollar settlement platform that will enable tech startups to raise capital in dollars.
This was disclosed on Thursday by the Divisional Head, Capital Markets, NGX, Jude Chiemeka, during the Annual A&O Fintech webinar, with the theme, ‘Fueling Fintech: The Power of Capital, the Role of Regulation”.
Chiemeka stated that while public markets were viable options for raising capital, fintechs had opted for private markets because of regulations of disclosure and stricter governance requirements that were necessary for listing publicly.
He said the partnership would create opportunities for domestic investors to have access to their shares and at the same time contribute to the growth of the Nigerian economy through democratisation of capital formation.
He explained that to address this issue, the NGX received approval from the Securities and Exchange Commission to launch a technology board for fintechs and tech companies to raise capital.
Chiemeka stressed that the tech board was geared to encourage tech firms to come to the market and raise capital in local currency, which would prove beneficial amid the high-interest rate environment that had made foreign investors hawkish.
He said, “NGX is working with CSCS and Euroclear to create a dollar settlement platform that allows tech companies (start-ups or existing ones) to raise capital in dollars.
“We have reviewed listing procedures for tech companies who want to list. Requirements around the number of shareholders, years of operation, among others, have been relaxed to catalyse these listings.”
Chiemeka further revealed that there had been more outflows than inflows from FPIs and that had impacted the performance of equities in recent times, especially as regards volume and value of transactions.
He called on the present administration to eke out deliberate and enabling policies to drive listings on the exchange’s platform.
“The government needs to be deliberate on policies that will encourage corporates to list. Now that it is thinking of creating palliatives due to the removal of subsidy, they can also consider those that will incentivise companies to list and see the domestic capital markets as choice platforms to raise capital.
“Publicly traded companies pay more taxes and are better governed so there is an upside for the government in driving more listings. This will go a long way to encourage these institutions to look into the local markets.” Chiemeka said.