The Nigerian financial sector faces a growing concern over delays in the Central Bank of Nigeria’s (CBN) offer verification process. Investors are expressing frustrations as, four months after the closure of some offers, no verification has been finalized. This delay not only impacts investor confidence but also stifles the efficient allocation of capital within the economy.
At the annual workshop of the Capital Market Correspondents Association of Nigeria (CAMAN), Johnson Chukwu, founder and managing director of Cowry Asset Management Limited, offered a compelling solution. Speaking on the theme ‘Banks’ Recapitalisation: Bridging the Gap Between Investors and Issuers in the Nigerian Capital Market’, he underscored the transformative potential of leveraging Information Technology (IT) and the Bank Verification Number (BVN) system to expedite this process.
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The Problem at Hand
The delayed verification process raises critical issues for investors who eagerly await the allotment of their investments. This stagnation hampers their ability to reinvest funds into other profitable ventures, disrupting the flow of economic activities. For a country like Nigeria, striving to enhance its capital market attractiveness, such inefficiencies pose a significant challenge.
The IT and BVN Solution
Chukwu’s recommendations center on deploying the advanced IT infrastructure available at the CBN in conjunction with the BVN system. These tools can streamline the verification process by automating data validation and eliminating manual bottlenecks.
“The high-level IT systems and the BVN database are resources that, if effectively utilized, can reduce the time required to accept or reject offers,” Chukwu explained. This approach would not only save time but also ensure transparency and accuracy in the verification process.
Why IT and BVN Are Key
- Efficiency: IT systems can process large volumes of data in a fraction of the time it would take manual systems, significantly reducing delays.
- Transparency: Automation minimizes human intervention, reducing the risk of errors or manipulation.
- Accessibility: With the BVN linking individuals to their financial profiles, verification processes can quickly confirm investor identities and fund sources.
Implications for the Capital Market
Implementing these changes could usher in a new era of efficiency and trust in Nigeria’s capital markets. Faster verification would enable quicker access to capital, allowing investors to diversify portfolios and fuel economic growth.
Moreover, this shift aligns with global best practices, positioning Nigeria as a competitive player in the global financial ecosystem. By bridging the gap between investors and issuers, the capital market can achieve its potential as a catalyst for economic development.
Conclusion
The call to action is clear: the CBN must embrace modern technology and fully utilize the BVN system to resolve persistent delays in offer verification. As Johnson Chukwu aptly pointed out, the tools are already available; what remains is the will to deploy them effectively.
In a time when investor confidence is critical to economic recovery and growth, such proactive measures could make all the difference. By fostering a more responsive and efficient capital market, Nigeria can unlock opportunities for investors and drive sustainable development.
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