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Analysts want govt assets in equity market as CBN eyes international financial centre

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FINANCIAL experts have urged the Central Bank to work towards enlisting the government’s corporate assets into the equity market as the bank plans to establish an international financial centre.

They say that it is important for the government to live by example as it plans to make Nigeria an international financial hub, seeking to promote a thriving market by catalysing the money market through local and international banks.

The international financial centres (IFCs) such as London and New York support economic success of their respective countries  by providing investors with secure platforms for structuring and domiciling collective funds.

Kenya, South Africa, and Brazil are some emerging markets that are globally recognised as international financial centres.

“Africa’s largest economy should not just announce its plans on this, let it prepare the ground through enlisting the government’s corporate assets into equity markets while also liberalising its real estate portfolio,” Economist and Chief Executive Officer of Economic Associates Ayo Teriba told The ICIR.

“A thriving global financial centre will accommodate both public and private bonds. However, in Nigeria’s debt market today, government’s debt dominates.

“It would be good to move Nigeria Railway Corporation and the Nigerian National Petroleum Corporation (NNPC) into the equity market as the CBN plans this international financial hub,” he said.

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The Central Bank Governor Godwin Emefiele, on Tuesday at the 14th annual Banking and Financing Conference, announced that within the next 12 months, it would establish  an international financial centre in the country.

He noted that Nigeria was set to join a very small elite group of countries operating  international financial hubs.

The apex bank governor said the centre would officially take off on September 2022 when the bank would establish the Nigerian International Financial Centre (NIFC).

He noted that the NIFC would act as an international gateway for capital and investments, driven by technology and payment system infrastructure.

According to Emefiele, the NFIC would take advantage of the existing laws such as BOFIA 2020, NEPZA  and other CBN regulations to create a fully global investment and a financial hub where monies, ideas, technology would move freely without hindrance.

The new financial hub, he said, would curate local and international banks to make them global champions.

The NIFC will be a 24-7 financial centre that will complement London, New York and Singapore financial centres and enable an acceleration of Nigeria’s homegrown initiatives, he further said.

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The NIFC will complement such initiatives as the IntraCorp.plc, the NI5 trillion infrastructure fund which will be launched in October 2021, the National Theatre creative hubs for youths as well as the E-naira project which will also debut in October 2021.

Chief Executive Officer of Cowry Assets Investment and Economist Johnson Chukwu said the initiative was good and would promote the money market and expand Nigeria’s financial participation through the market.

“This kind of participation would enhance financial inclusion and expand opportunities for FX supply,” he said.

Meanwhile, a publication from Researchgate.net revealed that the flow of international capital into economy would intensify with its commitment to international financial centres.
The research says that the financial markets are getting deeper with the enhanced capital inflow. The deepening of financial markets reduces the vulnerabilities of the economy in the face of evident capital outflows, it says.
International financial centres (IFC), also provides investors with some opportunities, namely low transaction costs, low risks and easy access to the capital.
Qualified labour force, political stability and income potential are the other apparent characteristics of the financial centres.
They also provide investors with secure platforms for structuring and domiciling collective
funds for developing countries, experts say.
“It is also a catalyst for development and economic growth for a country like Nigeria. Funds will be mobilised for the economy through the centre,” said Market Analyst Ike Ibeabuchi.

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