MTN’s stock offering demonstrates Nigeria’s ability to attract young cryptocurrency investors.
Nigeria’s primary stock market is planning to digitalize the equity sales process to attract younger investors who are more interested in cryptocurrencies and international assets than in local public firms.
According to Temi Popoola, Chief executive officer of the Lagos-based Nigeria Exchange Ltd, MTN Group Ltd.’s Nigerian unit’s successful selling of 575 million shares in December was ‘groundbreaking”, For the first time, he added, the South African telecom carrier offered an “end to end” electronic stock offering to investors.
The offering was 1.2 times oversubscribed, with 85 percent of investors being below the age of 40. Popoola said in an emailed answer to inquiries that this compares to 30% of all stock investors.
“Our goal is to encourage the next wave of growth in an age where investors’ needs are getting increasingly sophisticated and the rising youth demography is relying more on technology to transact business”, Popoola said.
A lot of young Nigerians have run away from trading in local equities, yet, they are still actively buying and selling cryptocurrencies, which, according to Paxful, a Bitcoin marketplace, accounts for the largest volumes outside the US. Africa’s most populated country has the biggest number of retail users making transactions below $10,000, according to Chainalysis.
However, the stock market is the largest economy in Africa may struggle to catch up with the returns given by cryptocurrencies. The Nigerian Exchange 50 Index is a measure of the nation’s largest equities, and it has gained 28% in three years till 2021. Bitcoin made six folds in the same amount of time.
MTN experimented with a digital app known as PrimaryOffer, which was administered by the Nigerian Exchange. The application allows paperless subscriptions, enabling investors to have access to the offer on electronic devices and complete the process in five minutes or less. There was also a paper-based subscription.
“At NGX, we understand the disturbance of new-age technology-based investments has created in the financial industry”, Temi said. “Digital change is the next area of growth for the NGX”.
According to Popoola, the course aims at automating other processes and procedures, like access to company information, engagement of market operators, and resolution of complaints. It also looks forward to attracting technology companies that want to raise more capital to increase opportunities for traders, he concluded.
A lot of Nigeria and Africa-focused tech startups have reached unicorn status, that is, a $1 billion valuation for a private company –recently, including Flutterwave Inc, which boosted its valuation to $3 billion above after its just-concluded $250 million funding round.
Popoola also said that attracting youth to the local stock market will “create and sustain a boost” in the local market as they become owners of the economy in years to come. “They will become primary beneficiaries of the sustainable and long-term benefits that come with investing”.
MTN Share Sales Shows Nigeria Can Lure Young Crypto Users
