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Oscar N. Onyema (OON)

NIGERIA - Finance

More than Stock Answers

CEO, Nigerian Stock Exchange (NSE)

Bio

Oscar Onyema was appointed CEO of NSE and member of the National Council in April 2011. Before this, he gained experience for over 20 years in both US financial markets and the Nigerian ICT sector. He is chairman of Central Securities Clearing System (CSCS) PLC, council member of the Chartered Institute of Stockbrokers of Nigeria (CIS), president of the African Securities Exchanges Association, and a Global Agenda Council member of the World Economic Forum. He also serves on the boards of all subsidiaries of the Exchange, National Pension Commission of Nigeria, and FMDQ OTC. He completed the Advanced Management Program at Harvard Business School and has an MBA from Baruch College and a BSc from Obafemi Awolowo University, Ile-Ife.

“The challenge is that crude oil accounts for about 90% of Nigeria’s forex earnings.“

How would you describe the NSE’s new e-dividend management system and what does it mean for your future operations?

The e-dividend management system facilitates the payment of dividends in an electronic format. Investors can get their dividends faster and hopefully if a lot of people register on the system this will reduce the instances of unclaimed dividends. We believe this is the way to go. We think that deploying technology to help us implement clearly thought out processes is the aim and it positions the NSE as a 21st-century stock market.

What is the strategy behind your decision to explore joint opportunities with the London Stock Exchange Group to accelerate dual listings?

The London Stock Exchange views itself as an active listing platform for African corporates that are looking to access international funds, as London is an international financial center. At the end of 2015, we started implementing our 2015-19 Strategic Plan and we increased our geographical footprint from Nigeria to Africa in general. We decided we would be a platform not only for the listing of Nigerian corporates, but also for Nigerian corporates operating outside Nigeria around the continent, as well as the many African international corporates operating in Nigeria. In order to do this, we thought it would be beneficial to partner with an exchange that is well known and well regarded as an international listing platform. The Nigeria Stock Exchange is the second largest platform in Africa; therefore, given the linkages that are beginning to emerge on the continent from the African Securities Exchanges Association (ASEA) perspective to the various sub-regional groupings, such as the West African Capital Markets Integration Council, we are positioning ourselves to be a trusted partner to domestic exchanges from an African perspective. We have had some success with this strategy. Seplat Petroleum Plc was the first truly dual listed IPO and it is fungible. In fact, this fungibility has allowed it to weather the forex storm we have seen because people can enter in Lagos and exit in London or vice versa. We have seen liquidity move across both markets based on what is happening in the economies.

What role does the NSE play in providing a positive environment for investors and what steps do you take to protect those investors?

We play a role that spans the value chain from promoting Nigeria as an investment destination to engaging with portfolio managers to talk about the details of the experience, such as how you actually access the market to deploy financing. The NSE ensures the ease of doing business on our platform and that the experience you get is world-class. We do this by making sure we have strong regulations that create a level playing field and a transparent market. The kind of market where you get financial reports from corporates on time and corporate governance is well implemented and viewed as a competitive tool. We have carried out a number of initiatives in this area to ensure corporates actually live up to their billing because you invest in a company in order to get positive returns. We have introduced a corporate governance rating system, which is now mandatory for companies on the main board. We have come up with various products to give international investors a menu of choices. Today, we offer listing and trading for equities, and we do the same for fixed income and exchange funds. Now we are working on derivatives, which we hope to launch sometime in early 2017. Another thing we do to ensure that foreign portfolio investments have a good experience in Nigeria is we make sure they are able to access their funds when they want to exit and that we understand what their issues are and address those as quickly as possible. If it is a matter beyond our power then we will advocate on investors’ behalf. We have been doing this around issues concerning the repatriation of forex for foreign investors.

What are the advantages for an indigenous company to list on the NSE?

There are many advantages for an indigenous company to list on the NSE, from capital raising through to the less-thought-about advantages such as branding. If you are a bank in Nigeria and you are not listed people will think there is something wrong. We provide a platform for raising capital, but more importantly when you are listed on the NSE you have a credit rating, which allows you to get other types of financing at better rates. You are viewed as being a transparent and compliant entity because of the rigors of listing and your on-going duties to report your financials and so forth. Another good reason for domestic companies to list is that typically the founder of a company wants to pass control from one generation to another. A further reason would be to diversify risk. By having multiple shareholders from different countries with different views, you are able to build a more sustainable company than if you remain the only shareholder. You might also list because you want to affect the company’s balance of debt and equity to ensure you have the optimal debt-equity ratio to optimize the valuation of the company. Listing gives you this flexibility and a tool to expand your business. We see a lot of M&A activity that is financed using stock. We are working hard with policymakers in Nigeria to introduce other kinds of benefits, such as tax breaks for listed companies, given that they comply better in paying their taxes than the equivalent private companies. Being a listed company also allows you the flexibility to expand geographically. If you look at some of our listed companies that have been founded by domestic entrepreneurs, they are beginning to become African champions. They are companies that are expanding across Africa. They have been able to do this because of the support and financing they have received through the NSE. There are so many positive reasons to list.

What are your expectations for 2017?

We really must institutionalize the fight against corruption in a way that the bureaucracy supports the ease of doing business. In the short term we have trade imbalance issues, we have strong demand for forex and we are not getting enough of it. We need to address this by increasing the supply of forex through borrowing forex, selling assets, doing swaps, or a combination of all three. For the long term we all know we need to diversify our forex sources. The challenge is that crude oil accounts for about 90% of Nigeria’s forex earnings. We have to actively support export-oriented industries.

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