James Smith
Tue, Aug 1, 2023 7:25 AM

Democratisation of Data and ESG Compliance Key to Enhancing Stock Liquidity in Nigerian Capital Market

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Democratisation of Data and ESG Compliance Key to Enhancing Stock Liquidity in Nigerian Capital Market
The Nigerian Exchange Limited (NGX) has highlighted the importance of data democratisation and environmental, social, and governance (ESG) compliance in attracting investments and enhancing stock liquidity in the Nigerian capital market. The divisional head of Capital Markets at NGX, Jude Chiemeka, emphasized the exchange's focus on technology to provide seamless access to data and products for investors. The use of market data for making financial decisions is increasing, making ESG disclosures and corporate performance vital considerations for investors.

The Nigerian Exchange Limited (NGX) has stated that democratisation of data as well as environmental, social, and governance (ESG) compliance are capable of enhancing stock liquidity and attracting the needed investments in the Nigerian capital market.

Jude Chiemeka, the Divisional Head of Capital Markets at the Nigerian Exchange Limited (NGX), highlighted these points during a panel discussion on 'ESG and Sustainable Finance: the Future of Investments'. This panel was jointly organized by the Securities and Exchange Commission (SEC) and the Financial Centre for Sustainability in Lagos.

In the digital age, data democratisation plays a crucial role in providing access to information, even for non-specialists. The Nigerian Exchange Limited is focused on leveraging technology to ensure that investors have seamless access to essential data. This accessibility is particularly important for retail investors, who need to analyze data to make informed decisions.

Market data analysis has become increasingly important globally, and the Nigerian capital market is no exception. A study conducted by Refinitiv in 2020 shows that 57% of capital markets professionals expect to spend more time analyzing data, with 74% considering data analysis to be the most important skill for future trading desk work.

Chiemeka urged investors to consider companies that are ESG-compliant and provide transparent and high-quality disclosures. He highlighted the significant correlation between ESG disclosures and corporate performance. Companies that demonstrate strong ESG compliance often gain access to more capital, attract a broader investor base, and can even raise capital from foreign markets.

As part of its commitment to promoting sustainable practices, the Nigerian Exchange Limited is a member of the Sustainable Stock Exchanges Initiative. The NGX Premium Board features companies that adhere to international best practices in corporate governance and meet the exchange's highest standards of capitalization and liquidity.

Furthermore, Chiemeka commended the Securities and Exchange Commission (SEC) for its efforts in establishing a sustainable finance framework, particularly in relation to green bonds. Nigeria's issuance of a green bond solidified its position as the first sovereign country in Africa to do so. Chiemeka applauded the SEC's role in making this milestone possible.

In another panel discussion focused on 'ESG and the Nigerian Business Environment', Tinuade Awe, the CEO of NGX RegCo, emphasized the benefits of incorporating ESG frameworks into business operations. Responsible corporate citizenship, operational risk mitigation, attraction of sustainable investors, and generation of long-term value are among the advantages highlighted.

Awe stressed the need for both the Nigerian public and private sectors to prioritize the implementation of key national and global ESG-related regulations. This approach would improve Nigeria's ESG performance, reputation on the global stage, and contribute to the United Nations Sustainable Development Goals (SDGs) and the Paris Agreement.

The rapidly evolving global ESG landscape calls for a partnership between Nigerian stakeholders in the public and private sectors. This collaboration is essential to create a sustainable future by addressing ESG-related risks and opportunities more transparently.

The Nigerian government should adopt initiatives that accelerate progress towards mandatory reporting on key ESG-related issues and climate-related reporting. These initiatives would further enhance transparency and support Nigeria's sustainable development goals.

Source of content: OOO News 2023-08-01 News

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