Mr. Oluwole Adeosun is President of Chartered Institute of Stockbrokers (CIS), the largest self-regulated professional group in the capital market. A highly versatile and experienced financier, Adeosun is a chartered stockbroker, accountant, tax expert, banker and director. In this panel interview with select senior journalists, Adeosun speaks on wide ranging issues on the economy, financial markets and stockbroking. Deputy Group Business Editor, Taofik Salako, was there
What’s your view on the Central Bank of Nigeria (CBN)’s directive on new banking recapitalisation?
The action of the Central Bank of Nigeria (CBN) was both necessary and overdue, especially when considered in the context of global trends.The developmental needs of Nigeria haves substantially increased since the last banking recapitalisation 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 modernise its financial system to stay competitive. Various external and domestic factors have significantly impacted the economy, necessitating an increase in minimum capital requirements for banks. So, the recapitalisation essentially aims to fortify banks’ capital base, enabling them to absorb unforeseen losses and sustain their role in fostering the growth and development of the economy as we aim for the $1 trillion economy, achievable by 2026.
From the perspective of an insider and operator, what are the most viable options for the banks in meeting the new minimum capital requirements, especially in the light of current macroeconomic environment?
Yes, most of the plans we have seen so far are considering rights issue alongside other options. I think that is the 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.
From a strategic standpoint, engaging in a public offering can also significantly elevate a bank’s visibility and reputation within the market landscape. This move has the potential to attract fresh investors, thereby amplifying its market capitalisation. With an augmented capital base, the bank gains enhanced financial prowess and adaptability to seize growth prospects and extend its footprint. Leveraging public offerings 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 the Securities and Exchange Commission (SEC) and the Nigerian Exchange (NGX).This transparency not only fosters investor trust but also solidifies the issuing bank’s credibility.
In addition to rights issues and public offerings, banks may also 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 capital market milieu.
How can banks tap to the bounteous potential of youths in attracting required capital, considering the relatively low participation in capital market?
To entice Millennials, Gen Z, and Gen Alpha under the recapitalisation programme, banks must adopt a multi-faceted approach that resonates with the preferences and values of these diverse generations. Banks should prioritise 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 floated its initial public offering in Nigeria.
Emphasising sustainability and social responsibility can also appeal to younger generations. Millennials, Gen Z, and Gen Alpha are known for their environmental and social consciousness. Banks can attract them by aligning with sustainable practices, such as offering green investment options, supporting community development projects, and promoting financial literacy initiatives. Moreover, personalised, and customised services are essential for engaging younger customers. Banks can leverage data analytics and AI technologies to offer tailored financial products and services that meet the unique needs and preferences of Millennials, Gen Z, and Gen Alpha. Personalised recommendations, budgeting tools, and educational resources can enhance their banking experience and foster long-term loyalty. Furthermore, transparency and authenticity are key factors in building trust with younger generations. Banks should communicate openly about their values, fees, and policies to establish credibility and integrity. Engaging in transparent communication through social media channels, blogs, and community events can help banks connect with Millennials, Gen Z, and Gen Alpha on a deeper level.
What’s your general assessment of the capital market, especially in the light of the roles you had highlighted?
I think the market is vibrant, it has not only fully recovered from the 2008 global shock, but it has surely 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, the capital market has witnessed monumental expansion. We have five thriving securities exchanges in the country, in contrast to only one then, and three of these are, we didn’t have before. The equities market has been on an upward trajectory since the entry of the administration of President Bola Tinubu), due to proactiveness in implementing reforms such as the removal of fuel subsidy and the liberalisation of the foreign exchange (forex) market. The stock market has recorded significant growth as the All Share Index (ASI) successively broke barriers at 70,000 points in October 2023 and crossed the historic 100,000 mark in January 2024.
Our market had emerged as one of world’s best-performing stock markets and as number one exchange in Africa.
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 specialised 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. The current leaders shaping Nigeria’s financial system—the Minister of Finance and Coordinating Minister of the Economy along with the CBN Governor are seasoned members of our institute. Their extensive experience and the commendable work they’ve undertaken underscored the caliber of professionals the institute produces.
For the first time in Nigeria you have chartered stockbrokers at the helms of the national economic and financial management, what does this really mean for the institute and the economy?
I will say it is a testament to the rich intellectual content of CIS’ membership and the growing profile of the institute, that her members currently heads 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, a Fellow of the institute, is a well-known and long-standing member of CIS. Similarly, Mr Olayemi Cardoso, another fellow of the institute, the CBN Governor is also a 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 worked with President Bola 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 economy can be faster and greater.
Talking about deepening the market and youth engagement, what efforts is the institute making to attract more youths into stockbroking?
As we have 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 talks across multiple institutions and partner universities and polytechnics to initiate capital market studies.
In fact, we have extended our efforts by granting CIS Diploma scholarships to several financially disadvantaged youths, many of whom have shown enthusiastic participation. We organise the inter-school capital market quiz and, more recently, introduced an essay competition to further foster financial literacy and engagement among the younger generation. So, we are doing a lot in this direction and we expect to continue to see the gains in terms of enrollment and participation overtime.
How would you rate the performance of the institute in recent years?
The CIS has undoubtedly continued to contribute its own quota to the resurgence and development of the Nigerian capital market in the last decade, and we have to thank our past presidents, Governing Council members and management for the commitment and immense work that they all put in.
In the last two years, the profile of the institute has risen very fast, and as I said, it’s an accumulation of work done by the past and present councils and office holders. We’ve seen a record number of new membership intakes, new Fellows and new life members. 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 our Level One Professional Examinations, as well as Diploma students, including those in the Diaspora, has been introduced. We 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 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, including training on Islamic finance, green finance and derivatives among others.
Also, 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.
The 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.
What would you like to be remembered for as a president of the institute?
I have worked with my team in the Governing Council and we put in our best to maintain the pace of growth and development set by our predecessors and projecting the image of the institute to significantly higher levels pan-Nigeria and internationally. We have established new partnerships and collaborations. I think I will always cherish the rich memories of the CIS@30 celebrations which was held in two phases between November 2022 and February 2024. The project was historic with a grand set of events to commemorate the 30th 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 history of the capital market – book and documentary, project was launched, as part of the CIS@30 celebrations. The book is based on the first-hand memories of the then Doyen of Stockbrokers (now the late) Otunba Olasubomi Balogun, the most senior Past President, Mr Olutola Mobolurin, former long-serving Director -General of the Nigerian Stock Exchange, Prof Ndi-Okereke-Onyuike and other eminent personalities in the capital market, including the immediate past Director-General of the Securities and Exchange Commission (SEC), Mr. 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 report and 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.
What is next after you pass the baton at the institute?
It has been two years of hectic public service on the professional front. While the baton is passed to the next president of the institute, in line with the orderly succession arrangements, to continue the work he has been part of in the last four years of stepping into the presidential corridor, I will take some time off to rest and later continue in the role of Immediate Past President providing support for the new administration to conclude one or two unfinished projects of my tenure. Much more, I will focus on my firm’s business full time along with other service engagements.
