By Niyi Jacobs
Local Nigerian banks’ capital raise programs have faced increasing frustration from investors, particularly those who participated in Rights Issues. The delay in recognizing their investments and confirming share allocations, caused by the Central Bank of Nigeria’s (CBN) rigorous verification process, has sparked concerns.
Proshare’s Economic and Market Intelligence Unit found that while the CBN’s strict verification is designed to ensure the integrity of the process and prevent financial manipulation, the delay is undermining investor confidence. Many investors have waited months without confirmation, leading to growing demands for fund refunds.
In an inflationary environment, where the time value of money is crucial, investors are losing patience as their funds remain locked. One investor noted that keeping money idle, even in risk-free instruments like Treasury bills, yields returns that could outpace the opportunity cost of waiting for verification.
Industry insiders suggest the CBN’s thoroughness, which includes verifying investor accounts and profiles, has resulted in a “bunching” effect, causing delays in the sequencing of capital raising programs. Banks, which had planned further offerings such as IPOs and private placements in Q4 2024, may now have to delay these efforts, creating additional frustration.
To maintain credibility and ensure the success of future capital raises, the CBN must strike a balance between thoroughness and efficiency, addressing investor concerns and speeding up the process.
