Olumide Orojimi, Brand & Corporate Communications Thought Leader, The Nigerian Stock Exchange (NSE) takes us through the exchange's recent launch of a knowledge platform, X-Academy, aimed at improving financial literacy.
Capital markets have become increasingly accessible to many retail investors with the advent of new technology and complex financial products.
Despite the rapid spread of such financially complex products to the retail marketplace, many of these have proven to be difficult for financially unsophisticated investors to master.
There is growing evidence that household stock market participation has significant effects on savings and on the financial development and performance of an economy. However, individual participation in the capital markets is limited, and quite heterogonous both among and within several countries.
Retail investors’ participation in the Nigerian capital market remains low as current activities in the nation’s capital market are majorly driven by foreign portfolio investors and local institutional investors. This level of participation, which represents 2% of the citizenry investing in the capital market, not only inhibits economic growth but exacerbates the silent crisis of inadequate retirement savings.
One of the barriers to increasing participation of retail investors in the Nigerian capital market is low financial literacy and education. Today, many potential investors simply do not know how to access the market to invest in securities.
The role of financial literacy in changing this narrative cannot be overemphasised. It goes without saying that financially literate investors are knowledgeable about opportunities in the capital market and are therefore in a better position to make informed investment decisions. So, greater awareness about the capital market is required on the part of retail investors to evaluate the choices available to them.
As part of efforts to boost capital market literacy, The Nigerian Stock Exchange (NSE) recently launched a knowledge platform, X-Academy, which offers bespoke capital market training programmes to equip individuals who will lead and transform businesses for sustainable growth.
Speaking at the media launch, Mr Oscar N. Onyema, OON, Chief Executive Officer, NSE, said: "X-Academy will help in strengthening financial literacy and enhance investment in the capital market. It will offer a wide range of courses geared towards bridging the knowledge gap of dealing members, issuers, investors and the general public about products and services of the capital market."
He stated that the establishment of X-Academy is consistent with NSE's tradition of pioneering far-reaching innovations within the Nigerian capital market. Mr Onyema added that the product feeds directly into the National Financial Inclusion Strategy (NFIS) which was launched by the Federal Government of Nigeria in 2012 to reduce the number of adult Nigerians who were financially excluded, from 46.3 per cent in 2010 to 20 per cent by 2020.
According to Mr. Onyema, X-Academy will provide individuals and businesses with a robust and effective array of training solutions that would ensure participants were abreast with trends in the rapidly evolving financial markets. “As a socially responsible organisation devoted to enhancing the fortunes of Nigerians and our investors, we are confident that participants of programmes offered by X-Academy will be better positioned to make informed financial decisions."
The programmes offered by X-Academy are facilitated by seasoned and certified subject matter experts, with both domestic and international exposure to practical experience. These programmes are built around six broad themes, which include: Listings and Trading on the NSE, Products of the NSE, Market Data and Technology, Financial Education, Corporate Governance, and Risk Management and Compliance.
Between 12-15 June 2017, NSE via the X-Academy, held a workshop to train corporate lawyers and risk managers on the Legal and Risk Aspects of Derivatives and Counter Party Clearing (CCP) Transactions in preparation for the launch of derivatives in Nigeria. The training was designed to provide participants with a broader understanding of the concept of derivatives from the two main perspectives of Exchange Traded Derivatives (ETDs) and Over The Counter (OTC) derivatives.
Also, on 26 July 2017 and 2 August 2017, NSE via the X-Academy, held a workshop on the process of listing a company on The Nigerian Stock Exchange and Enterprise Risk Management. The workshops provide the participants with up-to-date knowledge on the NSE listing process and a practical guide to the development and implementation of enterprise Risk Management respectively.
Commenting on the launch of the X-Academy, Mrs. Chinelo Chukwuma-Onwujei, Acting Head, Human Resources, NSE said: "The NSE will continue to enter into strategic alliances and collaborations with domestic and international institutes and professional associations in developing and deploying structured programmes aimed at creating value for individuals and businesses, while delivering superior performance. We will also continue to leverage on our affiliations and membership of international bodies to promote the programmes of the Academy and attract participants from across the globe to subscribe to them and further project X-Academy as the learning destination of choice for capital market programmes and financial literacy education."
Financial wellbeing of any individual investor is directly or indirectly related to his or her level of financial literacy. The literacy not only encompasses the approach to understanding a basic financial instrument but also involves the complex process by which an investor selects a particular financial product on the basis of his future financial goals. Thus it is highly important for an investor to understand the basic financial instrument for securing his/her financial future.