The Director-General of Securities and Exchange Commission (SEC), Dr. Emomotimi Agama, in this interview at Mid-Year Capital Market Review and Outlook organised by Arthur Steven Asset Management Limited, speaks on general issues affecting Nigeria’s capital market, Chris Ugwu of THE WHISTLER was there.
Since FTSE Russell put Nigeria’s Frontier upgrade on hold to monitor the impact of the new T+1 cycle on foreign portfolio flows, what specific operational benchmarks must the market meet in H2 to clear their concerns and secure the upgrade?
Let me first put the review in its proper context.
FTSE Russell’s decision to observe the market through the T+1 transition is not a setback; it is standard index-governance practice whenever a market undertakes a structural change of this magnitude. Nigeria went live with T+1 settlement on June 1, 2026 ahead of most frontier and several emerging markets and the index provider is simply verifying that the shortened cycle works as well in practice as it does on paper, particularly for foreign portfolio investors.
The benchmarks we are focused on delivering in the second half are clear. First, settlement efficiency: a sustained, near-zero trade fail rate under T+1, with full delivery-versus-payment discipline across custodians, brokers and the CSCS.
The early evidence since June is encouraging, and we intend to demonstrate at least a full quarter of clean settlement data. Second, funding and FX workflow: foreign investors must be able to complete their currency conversion and funding within the compressed cycle without being forced into pre-funding.
We are working closely with the CBN, custodians and settlement banks to ensure same-day FX execution and confirmation for portfolio flows.
Third, repatriation certainty: the Certificate of Capital Importation process must be fully electronic, timely and predictable, so that entry and exit are equally seamless.
The Commission has formally engaged the CBN on CCI modernisation precisely to align the regime with T+1 realities. Fourth, custodian and global-intermediary readiness: affirmation and confirmation cut-off times that work for investors in London and New York time zones.
If the market demonstrates these four things consistently and I am confident it will, the operational case for reclassification becomes compelling.
We are engaging FTSE Russell continuously and providing verifiable data, not assurances.
With the NGX up 47.4 per cent in H1 but inflation and energy costs rising, do you expect corporate margins to compress in H2, and should investors now pivot to high-yielding fixed income, or is there still room for growth in equities?
It is important to separate the short-term noise from the structural trend. Yes, inflation ticked up modestly between March and May, largely reflecting the pass-through of the fuel price shock linked to the Middle East conflict.
But the June reading of 15.91 per cent shows the disinflation path reasserting itself and remember, this time last year headline inflation was above 25 per cent. Core inflation has nearly halved year-on-year.
So the direction of travel remains favourable, even if the pace has moderated.
On margins, the picture will be differentiated rather than uniform. Companies with pricing power, dollar-linked revenues or energy self-sufficiency will defend margins; energy-intensive manufacturers with weak pricing power will face pressure.
That is precisely why the 47.4 per cent rally has not been indiscriminate, the market has been rewarding earnings quality, recapitalised balance sheets and dividend visibility.
As a regulator, I do not direct investors into asset classes. What I will say is that the question is not equities or fixed income, it is both, in proportions that match each investor’s horizon and risk tolerance.
Fixed income yields remain attractive in real terms as disinflation continues, and a laddered bond allocation is a sensible anchor. But equities are not exhausted: the banking sector enters H2 with the strongest capital base in its history, landmark listings are in the pipeline, and T+1 plus improving foreign participation are structural positives.
Disciplined diversification, not wholesale rotation, is the prudent posture.
Looking back at the first half of 2026, how would you assess Nigeria’s macroeconomic performance, and what has been its most significant impact on the capital market?
The first half of 2026 confirmed that Nigeria’s macroeconomic reforms are bearing durable fruit. GDP expanded by 3.9 per cent in the first quarter, headline inflation at 15.91 per cent in June is roughly ten percentage points lower than a year earlier, the naira has traded within a stable band around N1,380 to the dollar, and external reserves have benefited from firmer oil prices and improved production.
Food inflation touching single digits earlier in the year was a milestone many thought impossible.
For the capital market, the most significant impact has been the restoration of confidence and the return of real returns. The All-Share Index gained 47.4 per cent in the half year, total market capitalisation now stands at approximately N217 trillion, and crucially, this performance has been underpinned by earnings, recapitalisation and reform, not speculation.
Exchange-rate stability has been the single most important variable: it has allowed foreign investors to re-enter with confidence in their exit, and it has allowed domestic institutions to plan.
A stable macro foundation, married to our own market reforms the ISA 2025, T+1 settlement and a strengthened disclosure regime is what converted macroeconomic recovery into capital market performance.
Given the current economic environment, what is your outlook for equities, fixed income securities, and alternative investments in the second half of 2026?
For equities, I expect a more selective but still constructive second half. After a 47.4 per cent first-half advance, some consolidation is natural and indeed healthy.
The drivers remain intact: recapitalised banks deploying fresh capital, a strong pipeline of new listings, improving foreign participation and half-year earnings that we expect to be broadly resilient.
For fixed income, the environment remains rewarding. With disinflation continuing and yields still elevated, real returns are positive across much of the curve, and we expect vibrant sovereign, sub-national and corporate issuance, including infrastructure and green instruments. For alternatives, this is the most exciting frontier: our regulatory frameworks for digital assets under the ISA 2025 and the Accelerated Regulatory Incubation Programme, alongside REITs, infrastructure funds and commodities, are opening credible new channels.
Tokenised funds and asset-backed instruments will feature more prominently before year-end. The overarching theme for H2 is breadth, the market is no longer a one-asset-class story.
Inflation, high interest rates, and exchange rate volatility remain major concerns for investors. How do you see these variables evolving over the coming months, and what implications will they have for the capital market?
Our reading is that the worst is well behind us. The uptick in inflation between March and May was principally an external shock, the fuel-price pass-through from the Middle East conflict, rather than a failure of domestic policy, and June’s moderation to 15.91 per cent suggests the disinflation trend is resuming, supported by base effects, a stable naira and the harvest season ahead.
We expect gradual further easing into year-end, though food prices remain the swing factor.
On interest rates, the Central Bank has rightly prioritised stability; as inflation resumes its descent, room for measured easing should emerge, which historically is constructive for equity valuations and for duration in fixed income.
On the exchange rate, the naira’s stability this year has been the anchor of investor confidence, and improved reserves and oil receipts give the authorities credible capacity to sustain it.
