Majiyagbe: AACN Unlocking Critical Factors in Financing Nigeria’s Growth Trajectory

The Association of Asset Custodians of Nigeria recently held its flagshipAnnual Nigerian Investors Day in London, attracting a global audience who had the opportunity of gaining critical insight into Nigeria’s economic reforms. Presidentof the association, Mr. Babatunde Majiyagbe, said the primary goal of the conference is making Nigeria one of the most compelling destinations for investment in Africa remains unshaken.

Congratulations on your successful outing at this year’s investors’ conference organized by your group, the Association of Asset Custodians of Nigeria (AACN) in London, of which you are president. What would be your key takeouts from the event?

Let me start by noting that since inception of the Annual Nigerian Investors Day by the Association of Asset Custodians of Nigeria 15 years ago, our cardinal objective has remained to promote portfolio investments in Nigeria by providing a platform through which investors can gain critical insight into the Nigerian economy, as well as an opportunity to engage with appropriate government officials.

This year’s event met those fundamental objectives. We had in attendance almost 100 enthusiastic participants, including global custodians, fund managers, international brokers and dealers as well as domestic and foreign institutional investors.

A major takeaway that undoubtedly galvanized participation was the presence of the Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele. With his presence, attendees had the benefit of hearing directly, as the Honorable Minister provided details of ongoing economic reforms by the Federal Government, the expected outcome and possible future interventions and policies.

Present also at the conference was the Executive Commissioner, Operations at the Securities and Exchange Commission (SEC) – Mr. Bola Ajomale, who represented both the commission and the Director General, Dr Emomotimi Agama.  Other principal players in the Nigerian capital market, the Chief Executive Officer of the Nigerian Exchange Limited, Mr. Jude Chiemeka represented by Mr. Abimbola Babalola; Mr. Shehu Shantali, CEO, Central Securities Clearing Systems (CSCS) Plc, Mrs. Onome Komolafe also from CSCS, among others. We also had the leadership of the Angolan Stock Exchange; BODIVA (Bolsa de Dívida e Valores de Angola) as we look towards future collaborations between Nigeria and Angola.

With the aforementioned heavyweights in attendance, practically every facet of the Nigerian economy and capital market in particular were meticulously dissected to the delight of the participants and global audience.

Of course, the participants also had the opportunity to air their views and challenges. But, I can confidently declare that the principal purpose of the gathering was accomplished with resounding success. We remain grateful to the Global Custodian Banks who consistently engage us in looking for ways on how Nigeria will continue to attract capital in a more sustained manner.

What factors underscored your choice of theme for the event, Nigeria’s Next Chapter: From Reforms to Returns?

Our choice of theme was to highlight the primacy of the capital market as the foundation of capital formation from which economic development spins. So, it was imperative to examine various vital aspects of the Nigerian capital market in terms of the current standing, interventions, direction, among other policies.  As you are aware, Nigeria remains a destination of interest as far as Africa and the emerging markets are concerned. The growing appetite that foreign portfolio investors have in the Nigerian capital market and economy in general makes it expedient to engage them diligently and provide information and data that would enhance their confidence in the economy.

A key motivation for investment in any sector or economy is the hope of earning impressive returns. Nobody would dabble into a venture in an environment that is risk prone. So, a clear understanding of the environment where you want to invest your money or capital is very vital. That is why we were delighted by the remarkable participation of leaders of the capital market at the conference, not just by showing their physical presence but also by providing crucial answers to very salient issues and reforms.

As you know, foreign investors are crucial to the Nigerian economy. They contribute immensely toward improving liquidity in the capital and money markets. Also, they are a major supplier of foreign exchange which helps to ensure the stability of the local currency, the naira.

As asset custodians, we see ourselves as ambassadors of Nigeria and share in the responsibility of protecting the interests of these investors in the market.The expectations of such investors include effective regulations and development of market infrastructures that result in better asset protection, automation and straight through processes.

We occupy a unique position in the investment ecosystem. We see capital before it arrives, while it is invested, and when it leaves. Few participants are therefore better positioned to gauge investor sentiment and confidence. What we are seeing today is not a retreat from Nigeria, but a desire for greater policy predictability and sustained reform momentum. Thankfully, our very resourceful speakers and panelists did justice to the theme during the event.

Indeed, officials of the Securities and Exchange Commission and the Nigerian Exchange Limited spoke glowingly about the readiness of the Nigerian capital market to continue to unlock transformative opportunities for individual and institutional investors. Does the reality support such propositions?

Every leading capital market continuously evolves, and Nigeria is no exception. Even in the most developed economies, regulation and market enhancement remain ongoing priorities.

In course of the presentations and fireside chats, the speakers made it abundantly clear that the primary objective of the Nigerian capital market remains to create a well-functioning financial system that enables the economy to exploit its growth potential. This in turn would benefit those investing in the economy. The process is an ongoing one and will always vary depending on developments in the wider macroeconomic environment.

As a player in the industry, I am conscious of concerted efforts being made to create an ideal setting for capital formation. I commend the regulators such as the Central Bank of Nigeria and the Securities & Exchange Commission for their untiring efforts. Of course, investors understand that the quality of leadership of the capital market has an impact on direction of growth and development of any capital market. Nonetheless, performance could be impacted by the happenings in the macroeconomic environment.

You announced the association’s determination to strengthen the annual forum as a must-attend event for showcasing Nigeria’s economic credentials and crystallizing its economic development. What are we expecting in the next edition bearing in mind that a general election is scheduled to hold early next year?

Usually, at the end of each conference, we devote time to reflect on what transpired. The goal is to enable us re-examine issues and developments identified at each conference and put those into context when determining the direction of the next edition.

So, regarding the next edition, we shall articulate the highlights of this year’s event and previous editions before determining next year’s focus. The Honourable Minister of Finance and Coordinating Minister of the Economy graciously suggested that our next discussion should focus on reinvestment as the natural progression from reforms to returns.

The conversation should increasingly move beyond whether reforms are taking place to whether those reforms are improving Nigeria’s competitiveness relative to alternative investment destinations. Capital has choices. Our objective should be to make Nigeria one of the most compelling destinations for investment on the continent.

This review process is embedded in our association’s workflow and helps ensure that no critical issue is overlooked. We remain confident that the association will continue to provide a valuable platform for investor engagement irrespective of the electoral cycle.

AACN clocks 17 years this year. What milestones will you be celebrating and what are your plans for the future?

I would rather describe our journey so far as interesting and fulfilling. At the onset, there were just a few members and that naturally constrained our influence and visibility. Also, quite a large number of operators in the capital market did not understand the role of a custodian.

But today everything has changed, the awareness level and market landscape have grown considerably. Our membership has also increased significantly. Local and foreign clients now engageour services and we facilitate a significant proportion of investment transactions in the market. Also, through our market advocacy initiatives, we have contributed to the development of the Nigerian capital market in general.

In the past, we had collaborated with the Central Bank of Nigeria in developing the guidelines for custody of money market and other fixed income instruments; and the electronic certificate of capital importation (e-CCI). We have also worked with the Securities and Exchange Commission (SEC) on securities lending and borrowing; the mandatory appointment of custodians to registered Collective Investment Schemes as well as privately managed products. The list is almost endless.

Going forward, we will continue to contribute our quota towards advancement of our industry. We shall continue to engage regulators, financial market infrastructures and market operators for the benefit of investors and the country as a whole. Additionally, we intend to continue to enlighten the market of our role so that a significant portion of investors begin to use and benefit from our services. Yes, there is a huge retail market that remains untapped. With deft interventions, we will remain relevant in the economic scheme of things.

How would you assess the current state of the Nigerian custody industry considering its role as enabler of investment decisions? Remember that investor confidence remains the most pivotal element in capital market vibrancy!

One maxim that readily comes to my mind each time a question like this arises is: The financial market which encompasses equities, fixed income, money market, and commodities will inevitably experience shocks whenever something disrupts the macroeconomic environment. But it would always rebound. The logic behind this conviction is that the marketplace never closes completely because there will always be someone willing to stake his money even after a crisis or any other adversity.

Confidence in the capital market is derived from the existence of an attractive operating environment characterized by safety, stability and certainty. Government, regulators, market infrastructures and industry participants all play important roles in sustaining such an environment.

Capital ultimately chases trust. Nigeria’s greatest opportunity is not only to improve returns but to continually strengthen trust in its institutions, policies and markets. As confidence grows, investment will naturally follow.

The custody market in Nigeria is in a stable state and optimism steadily increasing. From its humble beginnings over 30 years ago, it has evolved into a major subsector in the capital market, attracting commensurate expertise associated with its role. Today, our industry is linked to the worldwide network of asset protection and investment.

From the perspective of an expert and banker, what is your reading of the current Nigerian economic landscape? Yes, it is good to seek foreign investment. But have we looked at the policy situation in the country?

Nigeria’s economy is at a pivotal point in its development journey. The reform agenda being implemented by government demonstrates a willingness to address structural issues that have constrained growth for many years. From foreign exchange reforms to fiscal measures and efforts to strengthen market institutions, the direction of travel is clearly towards building a more competitive and sustainable economy.

For investors, policy matters just as much as opportunity. While Nigeria offers compelling investment opportunities, investors also look for policy consistency, regulatory certainty and macroeconomic stability. Encouragingly, recent reforms have signalled a commitment to improving these fundamentals.

It is important to note that foreign investment and domestic investment are mutually reinforcing. International investors gain confidence when they see local businesses continuing to invest, expand and create jobs. Therefore, alongside attracting foreign capital, continued support for domestic enterprise remains critical.

While foreign capital remains important, some resilient economies are built on strong domestic pools of long-term capital. Pension assets, insurance funds, mutual funds and retail investment participation will continue to play a critical role in financing Nigeria’s growth story.

My assessment is one of cautious optimism. The reforms underway are laying foundations for long-term growth, and if pursued consistently, they will further strengthen Nigeria’s position as one of Africa’s most attractive investment destinations.

It is also important to recognize that foreign investment and domestic investment are closely linked. A foreign investor often takes comfort when local investors are expanding, reinvesting, and demonstrating confidence in the economy. Therefore, alongside attracting international capital, there should be continued emphasis on creating conditions that enable Nigerian businesses to thrive, expand, and create jobs.

Overall, my reading of the Nigerian economy is cautiously optimistic. The policy direction signals a commitment to long-term economic sustainability and growth. The key priority going forward is maintaining consistency, allowing reforms sufficient time to deliver results, and ensuring that the policy framework remains stable, transparent, and supportive of both local and international investors. If these elements are sustained, Nigeria is well-positioned to unlock its considerable economic potential and strengthen its attractiveness as an investment destination.

You have been a major player in the Nigeria capital market for quite a while. What is the difference in the capital market today compared to when you entered the market three decades ago?

Like I indicated previously, market development is a continuum that takes into account the evolution of society and happenings in the macroeconomic environment. As human needs evolve with time, there is also the attendant necessity to adjust to satisfy those needs.

Two key drivers of change in the capital market are technology and trends. The capital market was once a place where a few presumably discerning individuals would approach their stockbrokers or the stock exchange to buy shares of a few well-known companies. They earn a well-cherished dividend. Even the traditional structure of banks was one in which the individual walks into the banking hall to deposit or withdraw money. It was like a cashier’s world. But not anymore!

What we are witnessing today is the result of advancements in new technology. It has unleashed a wide gamut of processes, products, services, disruptions and more. It has opened participation in the market to practically everyone and democratized trading processes with the participation of retail investors in the capital market.

Look at core banking; the traditional structure of banks was no longer adequate in delivering personalized services instantly, especially in far-flung rural communities. You no longer have to establish branches everywhere with every customer visiting to make transactions. Fintechs have taken over such functions by using technology to deliver financial services to almost all classes of customers with speed and efficiency. This is disruptive innovation in the digital age. Several tech startups have grown to become global brands and making invaluable contributions to economic growth.

Ultimately, I believe that competition would inherently engender technological innovation that would determine the success or failure of any business or sector. In addition, effective regulation is imperative to ensure adherence to ethical conduct and stability within the financial ecosystem.

Nigeria’s story is often told through the lens of its challenges. Investors, however, must also consider its fundamentals: a large and entrepreneurial population, deepening financial markets, growing institutional capital, abundant resources and a demonstrated willingness to undertake difficult reforms. Our responsibility as market participants is to convert these fundamentals into sustained investment outcomes. I believe Nigeria’s next chapter can be one of inclusive growth, deeper capital formation and greater prosperity.