NGX Group advocates stronger capital market integration into monetary policy framework

Popoola made this call in a presentation delivered during a session at the CBN   Monetary Policy Committee, MPC workshop themed: “Structure and Behaviour of Nigeria’s Equity and Government Debt Markets: Implications for Monetary Policy Effectiveness.”

Represented by Jumoke Olaniyan, Group Chief Strategy Officer, NGX Group Popoola, noted that    monetary policy decisions travel through market architecture before reaching households and businesses, and weak market structures can dilute policy effectiveness regardless of the stance adopted by the MPC.

“The real question is not only the level of the policy rate, but whether the financial architecture through which it is transmitted is sufficiently deep and liquid,” he stated.

Popoola noted that Nigeria’s markets are increasingly pricing the broader reform environment, including FX reforms, fiscal adjustment, and improving investor confidence, rather than responding solely to changes in the MPR.

Highlighting the growing scale of the Nigerian capital market, Popoola disclosed that equity market capitalisation had risen to N159.73 trillion in 2026, while fixed-income market capitalisation stood at N55.82 trillion, adding that the NGX All-Share Index (ASI) recorded a 60.13 per cent year-to-date return, reflecting deepening investor confidence despite elevated interest rates.

However, he   observed that market activity remains concentrated in a few dominant sectors, while retail participation remains relatively low, limiting the broader wealth-effect channel through which monetary policy reaches ordinary Nigerians.

On the debt market, Popoola pointed to the divergence between the current MPR of 26.50 per cent and the 10-year sovereign yield of 14.95 per cent as evidence that markets are pricing long-term reform credibility rather than merely reacting to interest rates. The ASI’s 51.19 per cent return in 2025, achieved despite elevated rates, reinforced this position.

Popoola also cautioned that the coexistence of Treasury Bills, Open Market Operations (OMO) Bills, and standing facilities creates competing short-end signals that weaken benchmark clarity and dilute policy transmission. “MPR changes are absorbed across multiple instruments rather than transmitted cleanly through a single benchmark,” he noted.