Adeosun: Banks Should Prioritise Digital Innovation  to Connect Youths  During Recapitalisation

In this definitive interview , the outgoing President and Chairman of Counci of Chartered Institute of Stockbrokers, Oluwole Adeosun, discusses a range of issues in the economy and the capital markets, including the proposed banking sector recapitalisation, and some tips on the landmark achievements of the institute, during  his stewardship as the 12th President and Chairman of Council. Excerpts

How would you describe the Nigerian capital market at the moment?

The market is vibrant. It has not only fully recovered from the 2008 global shock, but has become one of the solid pillars of economic recovery in the country. Investor confidence is significantly restored, even though we still expect more faith from our local investors. Market regulation has been substantially tightened, and you hardly get to hear of market infractions anymore. Compared to 2010, which was 14 years ago, the Nigerian capital market has witnessed monumental expansion. We have five thriving securities exchanges in the country now, in contrast to only one back then, and three of these are commodities exchanges, which we didn’t have at all. The fixed income securities market has so blossomed that Nigeria is today about the leading debt capital market (DCM) in Africa. Investment product has increased and investors today can seamlessly choose between the traditional equities, mutual funds, exchange traded funds (ETF) fixed income securities and  derivatives amongst others. In terms of professional development, the Chartered Institute of Stockbrokers  (CIS), has implemented specialized qualifications and shifted examinations to remote settings. Nigerian stockbrokers now have a seamless path to practise in the advanced countries due to the institute’s international collaborations. In summary, the current leaders,  shaping Nigeria’s financial system—the Minister of Finance and Coordinating Minister of the Economy, along with the Governor of the Central Bank—are seasoned members of our Institute. Their extensive experience and the commendable work they’ve undertaken underscore the caliber of professionals the institute produces.

The Central Bank of Nigeria (CBN), has directed banks to recapitalize in the next 24 months in line with their individual level of authorization.  What was your immediate reaction to this announcement against the backdrop of the last banks’  recapitalisation in Nigeria.

The action of the Central Bank of Nigeria was both necessary and overdue, especially when considered in the context of global trends.  The developmental needs of Nigeria has substantially increased since the last banking recapitalization exercise that was initiated about 20 years ago. The country’s population as well as the serviceable market for financial transactions, have substantially grown with the advent of the African Continental Free Trade Area (AfCFTA), Nigeria must enhance and modernize its financial system to stay competitive. Various external and domestic factors have significantly impacted the Nigerian economy, necessitating an increase in minimum capital requirements for banks. This measure aims to fortify their capital base, enabling them to absorb unforeseen losses and sustain their role in fostering the growth and development of the Nigerian economy  as we aim for the one trillion dollar economy achievable by 2026.

Many banks are already preparing to float rights issue to recapitalize by deploying various options for capital injection, what are these options and their implications? 

It is logical, and the right thing to do. Businesses would naturally want to give their existing shareholders the privilege of enhancing their shareholdings, before reaching out to outsiders. If the Rights Issue succeeds, it means that the company was able to raise capital without changing the shareholding structure or diluting the proportionate stake of existing shareholders who choose to participate in the offering. Nevertheless, past occurrences suggest that following the Rights Issues, numerous companies may opt for a public offering to raise additional capital and attract more shareholders. This trend is especially probable given that many Nigerian banks have expanded into international markets, necessitating substantial capital to operate on a larger scale.

Can you advise on other capital raising methods that can equally  assist the banks to meet up, particularly public offer? 

From a strategic standpoint, engaging in a Public Offer can significantly elevate the bank’s visibility and reputation within the market landscape. This move has the potential to attract fresh investors, thereby amplifying its market capitalization. With an augmented capital base, the bank gains enhanced financial prowess and adaptability to seize growth prospects and extend its footprint. Leveraging Public Offers grants banks access to a vast reservoir of potential investors, facilitating swift accumulation of substantial capital. Moreover, it ensures transparency and regulatory adherence, as banks must conform to stringent disclosure standards mandated by regulatory bodies such as Nigeria’s Securities and Exchange Commission (SEC. This transparency not only fosters investor trust but also solidifies the issuing bank’s credibility.  

In addition to Rights Issues and Public Offers, Nigerian banks can diversify their capital-raising strategies by exploring avenues such as Private Placements or Strategic Investments from institutional investors. These alternatives furnish banks with supplementary pathways to fortify their capital base and advance their growth objectives within the dynamic Nigerian capital market milieu.

How can the banks attract millennial, Gen Z and Gen Alpha  under the recapitalisation programme? 

To entice Millennials, Gen Z, and Gen Alpha under the recapitalization programme, banks must adopt a multi-faceted approach that resonates with the preferences and values of these diverse generations. Banks should prioritize digital innovation and convenience. Millennials, Gen Z, and Gen Alpha are digital natives who prefer seamless online experiences and mobile banking solutions. By investing in user-friendly mobile apps, banks can cater to the tech-savvy preferences of these generations. This happened three years ago when a major telecommunication company did its.  Initial Public Offering in  Nigeria

Chartered Institute of Stockbrokers (CIS) is said to have achieved some significant developments in recent time,  could you mention some of them?

That is correct. The Chartered Institute of Stockbrokers (CIS) has contributed its own quota to the resurgence and development of the Nigerian capital market in the last decade, and we have to thank all our Past Presidents, Governing Council Members and Management for the commitment and immense work that they all put in. For sake of time and space, however, I restrict my answer to some of developments in the last two years when we recorded a record number of new membership intakes, new Fellows and new Life Members. The profile of the Chartered Institute of Stockbrokers has risen very fast, and as I said, its an accumulation of work done by the past and present Councils and Office Holders. The National Universities Commission (NUC) has approved the Benchmark Minimum Academic Standard (BMAS) for Securities and Investment / Capital Market Studies in the country. Full remote (online) examinations for all our Level 1 Professional Examinations, as well as Diploma students, including those in the Diaspora, has been successfully introduced. We now have a full-fledged training arm, CIS Academy, and last year, CIS Academy held two high profile executive courses in collaboration with the Lagos Business School. The first official district society of the Chartered Institute of Stockbrokers, the FCT & Northern Zone District Society was inaugurated in December 2023. The institute now has a world class electronic library in place. Perhaps our greatest area of achievement has been in advocacy. We held a high impact National Workshop in Abuja and the Annual Stockbrokers Conference in Abeokuta. In 2022 the Conference was hosted by the Edo State Government in Benin City. The CIS secretariat in the last one year, has hosted several important visitors who came on courtesy visits and these include the Securities and Exchange Commission, the Nigeria Exchange (NGX), Pension Fund Administrators Association, CISI United Kingdom and the Central Bank of Gambia, to mention a few. Please note also that CIS has leveraged on its unique position as the chartered body in the industry to rally other stakeholders for joint discussions on submissions on key industry matters like, margin lending, Capital Gains Tax and so on, as the needs arise.

Drawing from the last question, what efforts is the Institute putting in place to attract more youths into stockbroking profession ? 

As reiterated numerous times, youth engagement stands as our utmost priority. Tertiary institutions and schools serve as the primary focus of our annual capital market literacy campaign. Each year, we conduct Career Talk programs across multiple institutions and partner with universities and polytechnics to initiate capital market studies. In fact, we have extended our efforts by granting CIS Diploma scholarships to several financially disadvantaged Nigerian youths, many of whom have shown enthusiastic participation. We organize the Inter-School Capital Market Quiz competition and, more recently, introduced an Essay Competition to further foster financial literacy and engagement among the younger generation.

How would you assess the performance of CIS academy since its commencement of operation? 

CIS Academy was officially launched on Tuesday, 5th April, 2022 and has made significant strides in the first two years of its life. Building on the MoU signed with the Lagos Business School in 2022, the academy organised two successful top class executive training courses with LBS in 2023. Joining the world class faculty of the Lagos Business School as facilitators in the programmes were revered Capital Market personalities such as Dayo Obisan, former Executive Commissioner of SEC; Oscar Onyema, FCS, former Group CEO of NGX; and Mustapha Chike-Obi, the Chairman of Fidelity Bank Plc.The academy also organised a free training programme for the millennials, which exposed university students (from undergraduate to Ph.D. level) to the operations of the Nigerian capital market.  CIS Academy has also strengthened its  relationship with Chartered Institute for Securities and Investment, United Kingdom. Through this initiative, more members of the Institute have become members of CISI, UK without writing any examination. . The Academy has organised training programmes for over 2000 participants so far This includes training on Islamic Finance, Green Finance, Derivatives etc. Twice, the Academy, in conjunction with the Nigerian Exchange (NGX), organized executive capacity development courses on the Nigerian capital market.

The Institute had last year launched  regional groups  to engage all its members across the federation and Federal Capital Territory (FCT), what is the status report  of this initiative? 

On the 15th of December, 2023 the FCT & Northern Zone District Society of the Chartered Institute of Stockbrokers was inaugurated in Abuja, making it the first official district society of the institute. The society will serve as a forum to bring our members located in the northern part of Nigeria together and also facilitate the seamless trnsmission of the institute’s programmes to the northern region. Just a few weeks ago, the District held its first formal general meeting. We plan to expand to other parts of the country this year.

For  the first time in the history of Nigeria, stockbrokers have been appointed the Minister of Finance and Co-ordinating Minister of Economy as well as the governor of central bank. What does this mean to the Institute and what is your advice to the duo ?

It is a testament to the rich intellectual content of CIS’ membership and the growing profile of the institute, that her members currently head the two most important positions in the Nigerian financial system, and probably the entire economy as well. The Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, FCS is a well-known and long-standing member of CIS. Similarly, Mr Olayemi Cardoso, FCS, the Governor of the Central Bank of Nigeria (CBN) is also a Fellow and long-standing career member of the institute. It is important to draw your attention to the fact that these two gentlemen were appointed because they had been tried and tested, and passed the test of excellent performance. They both worked with President Bola Ahmed Tinubu when he served as Governor of Lagos State and performed satisfactorily. Secondly, both are stockbrokers-cum-bankers. They have full and comprehensive knowledge of the entire financial system, not just one segment as we had with others in the past. So, it bodes well for the country. In fact, as you can see, there has been seamless synergy between the money and capital markets since they took over, and the economy is the better for it. My advice to the two City gentlemen is that they continue to abide by our dictum: My Word is My Bond. Trust and Integrity have always been our watchword, and we are confident that Edun and Cardoso will always live by the dictum. Secondly, the gap between the money market and capital market in Nigeria is abnormally wide, in terms of development and utilisation. So, they should do their best to develop the capital market and create a fair balance in the utilisation of both markets, so that the overall performance of the Nigerian economy can be faster and greater.

What would you like to be remembered for as a Past President of the Institute?

I have always worked with my team in the Governing Council and we put in our very best to maintain the pace of growth and development set by our predecessors. I think I will always cherish the rich memories of the CIS@30 celebrations which was held in two phases between November 2022 to February 2024. The project was historic with a grand set of events to commemorate the 30th year anniversary of the establishment of our Institute, The extensive array of events provided by the CIS@30 project offered the Institute a rare opportunity to further enhance its brand value, and attract immense goodwill. The project on its own created so many milestones for CIS. Our Christian and Muslim members held thanksgiving services, to appreciate God for his guidance. For the first time ever, Closing Gong ceremonies were held within a week at fourdifferent securities  exchanges in Nigeria, in celebration. The Institute formally invested Dr Goodie Ibru, HFCS, Alh. Aliko Muhammed, HFCS, Gen Ibrahin Babangida (Rtd), HFCS, and Chief Chris Ogunbanjo, HFCS, Mr Mustafa Chike-Obi HFCS and Mr. Aigboje Aig-Imoukhuede, HFCS as Honorary Fellows of the Institute.  As part of CIS@30, the Institute staged her first awards ceremony in about a decade where merit awards were awarded to all the Past Presidents of the Institute, our financial partners, and the eight personalities that visited the President of the Federal Republic of Nigeria in 1992 and succeeded in obtaining the charter. The History of the Nigerian Capital Market (book and documentary) project was successfully written and launched, as part of the CIS@30 celebrations. The book is based on the first-hand memories of the then Doyen of Stockbrokers (now Late) OtunbaOlasubomi Balogun, the most senior Past President, Mr Olutola Mobolurin, former long serving Director General of The Nigerian Stock Exchange, Prof Ndi-Okereke-Onyuike FCS and other eminent personalities in the Nigerian capital market including the immediate Securities and Exchange Commission D-G, Lamido Yuguda. We also achieved a lot of milestones in terms of internal operations and protocol, but those will be outlined in detail in the institute’s annual reportand milestones compendium 2022-2024. So, to the glory of God, I wish to thank my fellow Office Holders, our team in the Governing Council, as well as management and staff for the various milestones achieved. I assure you that the institute will continue to soar even beyond these achievements.