In a bid to enhance foreign currency access for businesses within Nigeria, the Nigerian Exchange Ltd. has put forth a proposal to permit dollar-denominated bond listings on its platform according to report from Bloomberg.
This initiative is seen as a potential solution to alleviate the foreign currency challenges faced by companies in Africa’s largest economy.
The Nigerian Exchange is even contemplating extending this opportunity to include dollar-denominated stock listings.
CEO of Nigerian Exchange Ltd., Temi Popoola, speaking to Bloomberg said the primary goal of this proposal as facilitating companies operating from the country’s special economic free trade zones, as well as those generating revenue in foreign currency.
Popoola explained, “Our primary objective is to enable these companies to issue bonds denominated in dollars and eventually offer equity in dollars as well. It could potentially address the challenges posed by fluctuations in foreign currency.”
The move comes as a response to consistent concerns raised by oil companies, a prominent sector in Nigeria, regarding access to dollars for procuring raw materials.
President Tinubu’s reforms
Despite recent efforts, such as the foreign-exchange market overhaul in June under President Bola Tinubu’s new administration, which triggered a 40% devaluation of the naira, the shortage of foreign currency has persisted.
While the CEO, Popoola, refrained from providing a specific timeline for the potential implementation of these proposals, he did note that the government has displayed a keen interest in broader market reforms. He also highlighted the feasibility of effecting changes to listing regulations within a relatively short timeframe.
In addition to easing foreign-exchange controls, Nigeria has taken steps to address other economic challenges. Notably, the country has eliminated fuel subsidies, which amounted to $10 billion in the previous year, and initiated an agricultural overhaul to combat soaring food inflation. #fx #crypto2023
