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Nigeria: Olaleru – We’re Focused On Providing Solutions to Clients

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The Chief Executive Officer, RMB Nigeria Stockbrokers Limited, Layi Olaleru, in this interview speaks about the operations of the firm in Nigeria. Excerpts:

Can you give us an overview of the relationship between FirstRand and RMB Nigeria Stockbrokers?

RMB Nigeria Stockbrokers is a subsidiary of the FirstRand Group, the largest listed Financial Services Group (by market capitalisation) in Africa. FirstRand established the business in Nigeria in 2013, through a merchant bank, RMB Nigeria. To further its long-term vision of being an end-to-end financial services provider, FirstRand then expanded operations into a brokerage business in 2017. Currently, the brokerage business provides a unique platform for our domestic and foreign institutional fund managers to invest in Nigerian equities and achieve their desired fund objectives. RMB Nigeria Stockbrokers offers services to both domestic and international investors. Our clients include pension fund administrators, asset managers, insurance companies, offshore funds investing in frontier, emerging and sub-Saharan Africa markets, and sovereign funds. Our services include efficient execution of trades, post-trade services, market insights and research.

How will you describe the outlook for Nigeria’s equities market in 2021?

The global economy is projected to grow by 5.5 per cent in 2021 on the back of the successful rollout of COVID-19 vaccines, additional fiscal stimulus support coming from economies like the US and Japan, continued observation of social distancing, reopening of businesses and increased consumer demand. The Nigerian economy is also projected to return a positive growth of 1.5 per cent during the same period. Going by the strength of the tailwinds, we remain overweight on equities, largely due to a dearth of alternative investment assets with returns likely to be superior to inflation (currently at 17.33%) and the projected recovery of the global economy. Less compelling valuations and our meagre GDP growth expectation taper our 2021 base case ASI returns expectations to about 12 per cent.

How would you rate the Nigerian equities market compared to mature, emerging, and other frontier markets?

The Nigerian equity market is quite different from other frontier markets particularly in the African continent due to its advanced trading platforms and products, and market capitalisation. In addition, the relatively low equity market capitalisation to GDP of about 10 per cent indicates significant headroom for growth and development. The market could easily develop into the leading frontier market with additional trade liberalisation efforts and more alternate investment instruments such as derivatives and commodities.