Driving retail investment in Nigeria's capital market

The Nigerian Exchange Limited has set an ambitious target to increase the number of active retail investors to 5 million by 2025. This goal has sparked discussions and debates among experts in the financial market about the feasibility and strategies required to achieve it. In a recent interview on CNBC Africa, the Managing Director of Optimist By Affer Invest, Idi Alikhuen, shared insights on the current state of retail investor participation in Nigeria's capital market and the necessary steps to drive growth. One of the key points emphasized by Alikhuen is the importance of financial literacy and awareness among retail investors. He highlighted the significant decline in the number of retail investors since the global financial crisis in 2008 and stressed the need to educate potential investors about the opportunities available in the equity markets in Nigeria. With a growing proportion of domestic investors compared to foreign investors, there is a clear opportunity to attract more retail participation through targeted financial education programs. Another crucial aspect discussed in the interview is the role of technology in making equity investments more accessible and attractive to retail investors. Alikhuen pointed out the need for platforms to provide easy access to data and financial information, similar to those available in developed markets. He highlighted the importance of technological innovations such as real-time market data, technical indicators, and risk management tools, which can enhance the investing experience and confidence of retail investors. Furthermore, the interview addressed the evolving landscape of financial markets, particularly with the rise of private markets and new investment opportunities. Alikhuen emphasized the need for fund managers to create mutual funds that invest in private companies, allowing retail investors to access these markets through professionally managed portfolios. By building funds that perform well based on private equity investments, investors can gain exposure to this asset class while mitigating risks and benefiting from potential returns. Despite the potential growth and opportunities in the equity market, Alikhuen acknowledged the challenges of competing with other asset classes such as cryptocurrencies, which have been attracting a significant number of retail investors. He highlighted the need for continuous innovation and product development in the equity market to make it more appealing and competitive in today's rapidly changing investment landscape. In conclusion, driving retail investment growth in Nigeria's capital market requires a multi-faceted approach that includes enhancing financial literacy, leveraging technology, and creating innovative investment products. By addressing these key areas and adapting to the evolving market dynamics, the Nigerian Exchange Limited and market participants can work towards achieving the target of 5 million retail investors by 2025.