Tinubu Advisory Council: Guidelines to Strengthen Nigeria’s Capital Market

The policy advisory council under the leadership of President Bola Tinubu has urged the federal government to expedite the execution of the Nigerian Capital Market Master Plan in order to enhance the capital market’s resilience and facilitate the mobilization of funds for national development.

In the report titled “Policy Advisory Council Report: National Economy Sub-committee,” the council emphasized crucial reforms that can be undertaken by the government to bolster the capital market.

Macroeconomic challenges

The council acknowledged that macroeconomic pressures and challenges in the operating environment have adversely affected the market’s performance, leading to inadequate liquidity in the capital market.

The council recommended that the government consider issuing long-term, high-yielding debt securities, such as Special Purpose Bonds, specifically designated for dedicated projects or initiatives, such as those related to agriculture and industrial development.

The council urged the government to actively encourage greater involvement of pension funds and insurance companies in the capital market while fostering collaborations with fintech companies to introduce innovative financial products, including multi-issue structured products and special financial bonds. These measures would effectively support the interests of small and medium enterprises (SMEs) within the capital market.

The council further recommended that the government incentivize the issuance of environmentally, socially, and governance (ESG) compliant products, as well as encourage increased participation in such products.

The council advised the government to utilize SUKUK bonds as a strategic approach to mobilize capital for government projects. Additionally, it recommended collaborating with the Securities and Exchange Commission (SEC) to enable the tradability of SUKUK certificates on the stock market.

The Advisory Council highlighted that resolving and harmonizing multiple foreign exchange rates would promote capital importation and enhance investor confidence.

Monetary environment

Regarding initiatives aimed at establishing a monetary environment conducive to growth, the council appreciates the administration’s commitment to addressing the issue of multiple exchange rates and the disparity between the official and parallel markets, as mentioned in the President’s Inaugural Speech.

The council advised the government to conduct a comprehensive review of the Central Bank of Nigeria’s balance sheet and determine the accurate status of Nigeria’s external reserves.

The council further urged the government to undertake a thorough assessment of the potential effects of implementing a harmonized exchange rate regime on the economy. This assessment should include quantifying the necessary level of foreign reserves to effectively support the policy, taking into account the backlog of unfulfilled foreign exchange (FX) demand, associated obligations, projected FX demand for the year, and an additional contingency reserve.

The council called upon the government to adopt an assertive approach to expand foreign exchange (FX) supply and bolster external reserves. This includes actively seeking financial assistance from multilateral agencies and development finance institutions (DFIs) at concessional rates to support these efforts.

They said “Remove all FX intermediation windows and allow the banks as primary dealers to supply the FX market through a willing buyer/willing seller model.”