The Group Managing Director and Chief Executive Officer of Nigerian Exchange Group, NGX Group, Temi Popoola, has called for a stronger alignment between Nigeria’s capital market and the country’s monetary policy framework, stressing that financial market development should be viewed as a core economic requirement rather than a secondary concern.
He made the appeal during a presentation at a workshop organised by the Central Bank of Nigeria Monetary Policy Committee, focused on the structure and behaviour of Nigeria’s equity and government debt markets and how they influence the effectiveness of monetary policy.
Represented by Jumoke Olaniyan, the Group Chief Strategy Officer of NGX Group, Popoola explained that monetary policy does not operate in isolation. According to him, policy decisions ultimately pass through the financial system before reaching households and businesses, meaning that the strength of market structures plays a major role in determining how effective those decisions will be.
He noted that the key issue is not only the direction of interest rates, but also whether the financial system itself is strong enough, with sufficient depth and liquidity, to properly transmit policy changes across the economy.
Popoola further observed that Nigeria’s financial markets are increasingly reacting to broader economic reforms such as foreign exchange adjustments, fiscal policy changes, and improving investor confidence, rather than responding only to movements in the Monetary Policy Rate.
He highlighted the steady growth of the capital market, revealing that equity market capitalisation has risen to one hundred and fifty nine point seventy three trillion naira in 2026, while the fixed income market stands at fifty five point eighty two trillion naira. He also pointed out that the NGX All Share Index recorded a return of sixty point thirteen per cent on a year to date basis, reflecting growing investor confidence even in a high interest rate environment.
Despite this performance, he noted that trading activity remains heavily concentrated in a limited number of sectors, while participation from retail investors is still relatively low. He explained that this imbalance restricts the wider wealth effect that would normally allow monetary policy to reach everyday citizens more effectively.
On the government debt market, Popoola drew attention to the gap between the Monetary Policy Rate, currently at twenty six point five zero per cent, and the ten year sovereign bond yield of fourteen point ninety five per cent. He described this difference as an indication that investors are responding more to long term economic reforms and stability expectations than to short term interest rate movements.
He added that the market performance seen in the previous year, where the All Share Index recorded a gain of fifty one point nineteen per cent despite high interest rates, further supports the view that investor sentiment is being shaped by broader economic reforms.
Popoola also raised concerns about the structure of short term monetary instruments in the financial system. He explained that the coexistence of Treasury Bills, Open Market Operation bills, and standing lending facilities creates multiple reference points at the short end of the market, which weakens clarity in pricing signals. According to him, this situation reduces the efficiency of monetary policy transmission, as changes in the policy rate are spread across different instruments instead of flowing through a single clear benchmark.
His remarks add to ongoing discussions around how Nigeria can strengthen coordination between monetary authorities and the capital market in order to improve policy effectiveness and deepen financial system stability.
