Q&A with Oscar N. Onyema, CEO, Nigerian Stock Exchange (NSE)

By: The WFE Focus Team May 2018

We talk to Oscar N. Onyema, CEO, NSE following the recent Building African Financial Markets (BAFM) seminar, held under the umbrella of the African Securities Exchanges Association (ASEA), of which Oscar is the President.

NSE has recently been confirmed as the host of the 22nd Annual Conference of the African Securities Exchanges Association (ASEA) in November 2018. As the President of ASEA since November 2014, what is your vision for the association? And how important is it for Nigeria to be hosting the next ASEA meeting?

I am immensely pleased that The Nigerian Stock Exchange (NSE or the exchange) will be hosting the 22nd edition of the flagship conference of the African Securities Exchanges Association (ASEA or the Association), given Nigeria’s unique position in the Association and Africa. This event is coming at a time when Nigeria has turned a corner from its first recession in over two decades, to emerge as the best performing bourse in Africa and 3rd best performing globally in 2017. This story of resilient growth is at the very heart of this year’s conference, themed 'Champions on the Rise: Africa's Ascension to a More Sustainable Future'.

My tenure as ASEA’s President comes to an end soon, so it gives me the opportunity to address your question on my vision for ASEA in two parts. The first being what my vision for the Association was when the mantle of leadership was handed over to me, and what we have achieved in that space of time, and the second being what my vision for ASEA will be after I pass the baton.

My vision for the Association has been to build partnerships that are of strategic benefit to all members of the organisation, and to enhance the capacity of member exchanges to deliver on the Association’s vision of enabling African exchanges to be significant drivers of economic and societal transformation of Africa by the year 2025. We have executed on a number of strategic partnerships, notably the ASEA-AfDB African Exchange Linkage Project (AELP), while also increasing ASEA’s membership with eight new members.

To build capacity across our member exchanges, in 2017 we partnered with the Chartered Financial Analyst (CFA) Institute to provide discounts for staff of ASEA member exchanges and their respective members, and the Chartered Institute for Securities & Investment (CISI) to develop a common certification programme across the 28 ASEA member exchanges. Also in 2017, ASEA signed a strategic agreement with the Financial Sector Deepening Africa (FSD Africa) to promote the development of African capital markets. Under this partnership FSD Africa provides ASEA with technical and financial assistance towards ASEA’s annual conferences, our new online data portal, and recently launched African Exchanges Secondment Programme.

Looking forward, I would like to see increased sophistication and burgeoning international interest in African capital markets, not just because it will show that the ground work that we have laid in the past few years was rightfully done, but also to promote growth opportunities for Africa’s global financial markets.

Oscar, please outline the strategic priorities for NSE for 2018, and the key projects the exchange is working on at the moment.

Your question is quite timely, as the exchange is presently transitioning to a new four-year strategic plan that seeks to position us as Africa’s Preferred Exchange Hub. Our plan commences this year and runs through 2021. The first priority will be to ensure the continuity and completion of ongoing market development initiatives such as the launch of derivatives and the successful demutualisation of The Exchange.

We have also restructured the organisation to become more nimble and agile, ensuring that we recruit key talent where we do not have the required skill-sets internally. As part of our restructuring exercise, we will embark on a wholesale corporate shift from product-centricity to customer-centricity. Over the past few years, the exchange has developed a bouquet of products and services that we believe has brought delight to our customers in the retail and institutional space, but we think we have just scratched the surface in terms of providing customer satisfaction. Going forward, we will engage with our customers across all segments with a view of gaining a sound understanding of what their drivers of value are. This will help us create customised solutions tailored to providing flexibility in saving and accessing capital at all phases of the investor and issuer lifecycle.

One of our cornerstone priorities will be to leverage on strategic partnerships via building new ones in certain areas, and strengthening already existing relationships around the world. As we evolve to become a more customer-centric and globally competitive exchange, we understand that if the ecosystem is not moving at the pace which we aim for, we will be unable to meet our goals. Accordingly, we will intensify our advocacy efforts for market enabling economic policies, by engaging with private and public sector stakeholders within Nigeria. On the continent, we will continue to push for the adoption of global best practices across all African capital markets by continuing to leverage our network of over 20 global exchanges and industry associations (including the World Federation of Exchanges and ASEA).

The recent listing on NSE of a federal government Ijarah Sukuk bond represents an important step towards financial inclusion in Nigeria. Can you explain how the product works, and why it helps to deepen the country’s financial market?

The listing of the maiden Federal Government of Nigeria (FGN) N100 billion Ijarah Sukuk bond keys into our focus on being customer-centric, and providing resultant products that suit the specific needs of investors and issuers alike. In the case of the FGN Ijarah Sukuk listing, we were able to match the capacity to promote financial inclusion and provide access to finance to fund for critical road infrastructure across the country.

Sukuks are Shariah-compliant financial instruments, similar to bonds, but different in the sense that the issuer sells certificates that confers the investors with proportionate beneficial ownership of the assets purchased with the proceeds of the bond. The variance between Sukuks and conventional bonds also lies in the fact that conventional bonds are based on interest payments and bondholders can lay claims to the cash flows from a bond investment while Sukuk holders lay ownership claims to the underlying assets and receive periodic distributions of profits from these assets.

The FGN Sukuk Bond was issued at an accessible price point of N1000 per unit, thus making it easy for the citizenry to participate in the bond. Also, the Sukuk bond ensures that persons of faith who otherwise would not have participated in capital market activities are not disenfranchised, as it meets their religious concerns.

NSE has been very active in the CSR and ESG space, with various programmes including the Employee Give-Back Drive, a commitment to education, a recycling drive, and work towards gender parity. Please tell us about the strategic importance of these initiatives.

As a Sustainable Stock Exchange (SSE) under the United Nations Global Compact initiative, the NSE recognises its crucial role in supporting economic growth by providing an efficient and sustainable capital market. We understand that our position presents us with an important opportunity to positively influence dialogue on sustainable development through the mobilisation of funds in the right direction. This is underpinned by our Corporate Social Responsibility (CSR) strategy, with our business and operational decisions guided by four key areas of Community, Workplace, Marketplace and Environment.

As a responsible corporate citizen, we contribute positively to the communities where we live and work with initiatives aimed at supporting livelihoods. In 2017, in response to the insurgency in the North-East of Nigeria, a huge number of people became displaced, thus affecting the ability of children to effectively continue with their education. Accordingly, the NSE, through an education intervention fund, donated a fully functional school to assist internally displaced persons in Borno State with access to basic education.

We are committed to fostering a qualitatively oriented work environment that values employee diversity and wellbeing that harnesses the talents and skills of our people. To achieve this, we constantly leverage capacity building, fair recruitment and compensation policies as well as maintain a motivated diversified workforce. We are also focused on promoting a market-based approach to Environmental, Social and Governance (ESG) imperatives amongst all stakeholders, and on reducing the environmental impact of the exchange’s operations.

For us, our interventions arise from our commitment to (i) cultivating a sustainable organisation that prioritises responsible financial and investment services; (ii) promoting sustainable business practices; (iii) championing engaged and talented people; (iv) driving community contribution; and (v) leading in environmental stewardship.