May. 2, 2018

Oscar Onyema


Oscar Onyema

CEO, Nigerian Stock Exchange (NSE)

TBY talks to Oscar Onyema, CEO of the Nigerian Stock Exchange (NSE), on the importance of updating tax laws, getting stronger risk management tools, and using derivatives to drive economic development.


Oscar Onyema was appointed CEO of the NSE and a member of the National Council in April 2011. He has 20 years’ experience in both US financial markets and the Nigerian information technology sector. He is Chairman of Central Securities Clearing System (CSCS) PLC, 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, the National Pension Commission of Nigeria, and FMDQ OTC. He completed the Advanced Management Program at Harvard Business School, has an MBA from Baruch College, and a BSc from Obafemi Awolowo University, Ile-Ife.

What has been the volume of stock trading over the past year?

Compared to 2016, volume has significantly gone up. Currently, we do almost 400 million shares a day, which works out to a little above NGN4 billion on the equity markets. We also see a great deal of activity in the primary market, mostly driven by fixed income. There was USD5.6 billion worth of listings in 1H2017, and about USD5 billion of that is fixed income. The federal government has issued a number of fixed income products, including Eurobonds. On the equity side, we saw about USD188 million worth of listings in 1H2017. We have had two listings, two M&A activities, special placements, and similar others.

Is the government interested in issuing more diaspora bonds, particularly considering the low tax collection rates in the country?

Nothing can be a true substitute to an appropriate tax return. Our tax laws need to be updated and enforced. There needs to be enough flexibility to support the government agenda in terms of giving incentives to particular sectors or industries where the government wants to stimulate growth. If the government wants to do import substitution, it has to determine the industries with a competitive advantage, and support and focus on those.

How developed is the derivatives market in Nigeria?

We need strong risk management tools. The exchange has been working hard to introduce exchange-traded derivates. A clearing house is needed that will support and create innovation. It is the contra to every trade: buyer to seller and seller to buyer. If this were present, we would see greater risk taking. We need the infrastructure and frameworks that support entrepreneurial activity and risk taking. Derivatives are a tool to drive economic development. One can hedge on anything from interest rates to commodities and FX, which is something we want to encourage. We do a high level of capacity building, speaking to various players from regulators to potential users. From the regulators' point of view, derivatives are often viewed in a negative light; however, we have the opportunity to design derivative products that are not that highly leveraged. Therefore, if the market moved against us, it would not blow everything up. We have the advantage of having a clean slate here and can learn from developed markets.

What is the NSE's role in attracting foreign investors to Nigeria?

We have built a credible platform from a regulatory perspective, following just and equitable principles, and have tried to create a fair market that is transparent. From implementation to automation to having the appropriate rules and disclosure mechanisms, we have got it all in place. We have also gone out to engage with institutional investors, doing roadshows in the US, Europe, Asia, and South Africa, talking to investors and explaining the improvements and reforms we have made in the market, and letting them understand how they can access our market. We have been active with both foreign and domestic investors to get them to participate in the market. Finally, we have partnered with many global institutions, being full members of the World Federation of Exchanges, and are the first African exchange to join the ISG. A number of these bodies provide standards and best practices. Membership in these organizations means adopting best practices, which gives global investors the confidence that we are committed to running a world-class marketplace.

What is the NSE doing to improve the investment climate here, and how would you assess the attractiveness of Nigeria?

Nigeria is not where it needs to be in regard to its attractiveness to investors. We are doing a great deal to improve our ranking, however. We have engaged the government to help work on the ease of doing business, including: the ease of registering companies, raising capital, entry of goods and services, entry of people, and so on. We can do more in these areas and are working closely with the government.