NGX Demands Capital Market Inclusion in Policy
Nigerian Exchange Group has urged the Central Bank of Nigeria to integrate capital market development directly into its monetary policy framework. Temi Popoola, the chief executive officer of the group, argued that monetary decisions must treat the capital market as a macroeconomic necessity. He noted that the central bank cannot achieve its policy goals without a deep, liquid, and coherent financial market. Financial directives pass through the architecture of the market before hitting households and businesses. A weak trading structure will dilute the effect of any policy stance the regulators adopt.
The stock exchange chief delivered the presentation during a specialized central bank monetary policy workshop. He observed that local financial markets now price long-term reform credibility over short-term interest rate adjustments. Equity market capitalisation has climbed to N159.73 trillion, while the fixed-income sector stands at N55.82 trillion. The exchange index recorded a 60.13 percent year-to-date return despite elevated interest rates across the banking sector. This growth demonstrates that the market is responding to broader foreign exchange adjustments and rising investor confidence.
The domestic market remains vulnerable due to high concentration in a few dominant sectors. Retail participation among ordinary citizens is also low, which limits the wealth-effect channel of central bank decisions. Popoola pointed to a clear disconnect between the monetary policy rate of 26.50 percent and the 10-year sovereign bond yield of 14.95 percent. This gap shows that debt markets are looking past immediate interest rate hikes toward long-term fiscal stability. Clean and predictable benchmark yield curves must replace the current fragmented pricing structure.
The exchange warned that the simultaneous issue of competing short-term debt instruments weakens monetary signals. Treasury bills, open-market operations, and central bank standing facilities create conflicting benchmarks for investors. Policy rate changes are absorbed across multiple instruments instead of being transmitted cleanly through a single market rate. To fix this transmission problem, the exchange group proposed the creation of a Transmission Conditions Index. This new index will use real-time market data to help regulators track how accurately policy moves affect the financial system.
Capital market development is an essential part of national economic planning, rather than an isolated sector goal. Deeper secondary market liquidity and broader retail participation will create a more resilient transmission mechanism for government policies. The group called for regular inclusion of capital market indicators in the official data review of the monetary policy committee. Closer coordination between fiscal authorities, central bankers, and market operators will protect the wider economy from future shocks.