NGX Group pushes for greater inclusion of capital markets in national financial planning strategy

Temi Popoola, the Group Managing Director/CEO of Nigerian Exchange Group (NGX Group), has called on the Central Bank of Nigeria's (CBN) Monetary Policy Committee (MPC) to prioritize capital market development as a crucial aspect of the nation's macroeconomic framework, emphasizing that the success of monetary policy is heavily reliant on the depth, liquidity, and coherence of Nigeria's financial markets.

n

Popoola made this assertion during a presentation at the CBN Monetary Policy Committee workshop, which was themed "Structure and Behaviour of Nigeria's Equity and Government Debt Markets: Implications for Monetary Policy Effectiveness", where he was represented by Jumoke Olaniyan, the Group Chief Strategy Officer of NGX Group.

n

According to Popoola, monetary policy decisions are transmitted to households and businesses through the market architecture, and any weaknesses in the market structure can undermine the effectiveness of these policies, regardless of the stance adopted by the MPC.

n

He stressed that the key consideration is not just the policy rate, but whether the financial architecture facilitating its transmission is sufficiently deep and liquid, posing the question of whether the existing framework is effective in conveying monetary policy decisions.

n

Popoola observed that Nigeria's markets are now factoring in the broader reform environment, including foreign exchange reforms, fiscal adjustment, and growing investor confidence, rather than merely responding to changes in the Monetary Policy Rate (MPR).

n

The NGX Group CEO highlighted the significant growth of the Nigerian capital market, with equity market capitalisation reaching N159.73 trillion in 2026, while fixed-income market capitalisation stood at N55.82 trillion, and the NGX All-Share Index (ASI) recording a 60.13 per cent year-to-date return.

n

This surge in the ASI reflects increasing investor confidence, despite the prevailing high interest rates, but Popoola noted that market activity remains concentrated in a few dominant sectors, with retail participation remaining relatively low, limiting the broader wealth-effect channel through which monetary policy impacts ordinary Nigerians.

n

Regarding the debt market, Popoola pointed out the disparity between the current MPR of 26.50 per cent and the 10-year sovereign yield of 14.95 per cent, indicating that markets are pricing long-term reform credibility rather than merely reacting to interest rates.

n

The ASI's 51.19 per cent return in 2025, achieved despite elevated rates, further reinforced this position, underscoring the idea that markets are looking beyond short-term policy changes.

n

Popoola also warned that the coexistence of Treasury Bills, Open Market Operations (OMO) Bills, and standing facilities creates competing short-end signals that weaken benchmark clarity and dilute policy transmission, resulting in MPR changes being absorbed across multiple instruments rather than being transmitted cleanly through a single benchmark.