Capital market, lifeline for Nigeria’s development financing —Uwaleke

Nigeria’s capital market has been positioned as a critical financing engine capable of bridging the country’s widening infrastructure deficit, reducing dependence on foreign debt, and unlocking long-term industrial growth, amid mounting fiscal pressures confronting the economy.

This position was advanced by Uche Uwaleke, professor of capital market studies and director at the Institute of Capital Market Studies, Nasarawa State University, during a workshop organised for staff of the Bank of Industry on Thursday in Lagos.

Uwaleke said Nigeria’s growing debt burden, weakening official development assistance flows, and currency mismatch risks have made it imperative for the country to deepen domestic capital mobilisation through the Nigerian capital market.

He said Nigeria’s total public debt rose to N159 trillion as of December 2025, while its infrastructure financing gap now exceeds $100 billion, making traditional funding sources increasingly unsustainable.

“Development financing in the 21st century cannot rely primarily on concessional loans from multilateral institutions, government budgets, or bank lending alone,” he said. “The scale of Nigeria’s infrastructure and industrial transformation challenge demands that all available capital is mobilised, especially through the capital market.”

He argued that capital markets provide the kind of long-term patient capital required for infrastructure, housing, industrialisation, renewable energy, agriculture and SME expansion, unlike commercial banks that are constrained by short-term funding structures.

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The presentation comes as the nations’s capital market records one of its strongest rallies in recent years. Uwaleke disclosed that the Nigerian Exchange All-Share Index stood at 252,508.19 points as of May 13, 2026, while total market capitalisation climbed to N161.84 trillion, representing a year-to-date return of 62.27 percent.

He noted that Nigeria’s current market capitalisation, when adjusted for exchange rates, has effectively returned to its 2008 peak valuation in dollar terms after nearly two decades.

The capital market expert said deepening domestic financing through equities, bonds, Sukuk, green bonds, infrastructure funds and securitisation would strengthen fiscal sustainability, reduce exposure to exchange rate shocks and improve financial sovereignty.

He identified pension assets nearing N30 trillion as a major source of long-term capital that could be channelled into infrastructure and development-oriented investments if supported by appropriate regulations.

Uwaleke also urged the Bank of Industry to reposition itself from a traditional lender into a market catalyst capable of mobilising larger pools of private capital for development financing.

According to him, BOI can play strategic roles as an anchor investor, guarantor, securitisation originator and pipeline developer for companies seeking access to the capital market.

He revealed that BOI’s relationships with more than one million enterprises place the institution in a unique position to prepare SMEs and industrial firms for capital market access through improved governance structures, financial reporting and investor readiness.

“Many of BOI’s client companies are too small or too risky to access capital markets directly. However, with BOI guarantees, their credit profiles can improve sufficiently for bond issuance,” he said.

The professor recommended that BOI establish a dedicated Capital Market Development Unit to focus on securitisation transactions, SME bond guarantees and preparation of market-ready enterprises.

He further advised the institution to pursue pilot securitisation of performing loans, deepen collaboration with the Nigerian Exchange, Securities and Exchange Commission, PenCom and development finance partners, while building internal expertise around environmental, social and governance financing.

Drawing lessons from India, South Africa, Kenya and Brazil, Uwaleke said successful capital market-led development financing depends heavily on strong institutional investors, regulatory certainty, stable macroeconomic conditions and technological innovation.

He particularly pointed to Kenya’s mobile bond initiatives and Brazil’s transition from direct development lending to market facilitation as models Nigeria could adapt.

Despite the recent momentum, he warned that Nigeria’s capital market still faces structural weaknesses, including low retail investor participation, shallow derivatives trading, governance concerns and insufficient listings from high-growth sectors such as technology.

He stressed that sustained reforms, stronger investor protection, efficient market infrastructure and improved transparency would be crucial to maintaining investor confidence and attracting both domestic and foreign capital inflows.

“The recent growth in market capitalisation, pension fund expansion and product innovation indicate substantial potential,” he said. “But unlocking this potential will require coordinated action across regulators, institutions and market participants.”