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NGX collaborates with CSCS, Euroclear to enable dollar-based capital raising for tech startups

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Nigerian Exchange Limited (NGX) has unveiled its strategic collaboration with Central Securities Clearing System (CSCS) Plc and Euroclear to establish an innovative dollar settlement platform aimed at enabling technology startups to raise capital in dollars.

NGX emphasized that this groundbreaking initiative is set to open avenues for local investors to access their shares while simultaneously contributing to Nigeria’s economic expansion through the democratization of capital formation.

Speaking at the Annual A&O Fintech webinar themed “Fueling Fintech: The Power of Capital, the Role of Regulation,” the Divisional Head of Capital Markets at NGX, Jude Chiemeka highlighted the challenges faced by fintechs in selecting funding sources.

He noted that while public markets serve as a viable capital-raising option, fintech firms have shown a preference for private markets due to the stringent regulatory disclosure rules and governance requisites associated with public listing.

To address these concerns, NGX secured approval from the Securities and Exchange Commission (SEC) to introduce a dedicated technology board tailored for fintech and technology companies to access capital.

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Chiemeka underscored the tech board’s objective of encouraging tech enterprises to enter the market and raise capital in the local currency. This approach becomes particularly advantageous given the prevailing high interest rate environment, which has elicited a cautious stance from foreign investors.

Chiemeka also acknowledged the potential impediment of settlements that could deter fintech from seeking capital in US dollars within the public market. To surmount this challenge, he revealed a strategic partnership in progress.

“NGX is collaborating with CSCS and Euroclear to establish a dollar settlement platform, enabling tech companies, whether startups or established entities, to raise capital in dollars,” he stated.

Furthermore, he indicated that NGX has eased listing requirements for tech companies, including criteria related to the number of shareholders and years of operation, in order to expedite these listings.

The collaboration between NGX, CSCS, and Euroclear is poised to reshape the funding landscape for technology startups in Nigeria and foster an environment conducive to their growth and expansion.

(Edited by Oludare Mayowa; omayowa@globalfinancialdigest.com; Newsroom: +234 8033 964 138)

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