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The deployment of digital innovations would enhance the capital market sector by boosting confidence levels of all stakeholders, reduce fraud, and grow the economy.
Head, Business Technology and Digital Innovation at Central Securities Clearing System (CSCS) Plc, Mr. Tobe Nnadozie, made the submission recently in Ibadan, Oyo State, during the Annual Chartered Institute of Stockbrokers’ Conference 2024.
The CSCS official, who spoke on ‘Harnessing Digital Innovation for Capital ‘Market Expansion and Economic Growth in Nigeria’, Nnadozie noted that the time had come to unlock the potentials in the country’s capital market.
According to him, digital innovation refers to the use of technology to create new or improve existing products, services, and processes.
This, he added, includes fintech solutions, blockchain and cryptocurrency, and artificial intelligence and data analytics.
While noting that capital markets are financial markets where companies and governments can raise money by selling securities, Nnadozie however, lamented a situation where many accounts in the market were inactive.
He said: “As at September 2024, 6,099,128 were total tradeable accounts, 531,262 were active accounts, representing 9.54 percent only while 4,128,068 were suspended accounts. This speaks volume.”
Nnadozie noted that the market currently faces a myriad of challenges that threaten the growth of the sector and the nation at large.
But he said, those constraints were not insurmountable where there was willingness to adopt digital innovations by all concerned.
“Nigeria’s capital market faces several challenges, including low liquidity, limited investor participation, and inadequate regulatory framework, that create barriers to growth.
“The Nigerian capital market presents opportunities for growth, including the potential for increased institutional and retail investor participation, leading to a more liquid and diversified market.”
He said that where digital innovation is embraced, that will lead to improvement in efficiency by automating processes and reducing transaction costs, making it easier for investors to participate in the market.
Nnadozie added that the innovation will also bring about transparency that would make it easier for investors to access information and track transactions, reducing the risk of fraud or manipulation.
Also, the CSCS official added that digital innovation in capital markets can expand investor participation by making it easier for new investors to enter the market, increasing liquidity and diversifying investment opportunities.
Among others, Nnadozie, said that digital innovations will lead to increased investment and liquidity and will also encourage job creation and entrepreneurship opportunities.
He said that digital investment platforms were making capital markets more accessible to retail investors, allowing them to invest in a wide range of financial products and services from anywhere at any time.
On strategies to promote digital innovation in Nigeria, Nnadozie advocated for policy and regulatory framework, public-private partnerships, capacity building and education, well-educated investor base.
He commended the regulator, Securities and Exchange Commission (SEC) for its commitment to various initiatives that are driving digital innovation in the capital market.
According to him, one of the major steps taken was Know Your Customer (KYC) update and new account validation system.
This major initiative, he added, has led to easier adoption of digital solutions in the market.
He said both the issuers and the Nigerian Exchange (NGX) have made noticeable progress through the digital trading platform, which has eased the ongoing rights and public offers in the market.
He advocated for more of these initiatives and positioned that the CSCS through the current leadership having created the founding layers of digitalization with various self-service portals and Application Programming Interfaces (API) will be willing to work with the market.
