The History of Investor Relations (IR) in Nigeria and Its Brief Metamorphosis

The history of investor relations (IR) in Nigeria could arguably be considered to have started as far back as when the first documented business between different people or organisations took place in the country. In other words, in Nigeria, from the very beginning, IR has been there, even if intuitively.

Historically, the beginning period was followed by an era of statutory public documentation which spelt the origins of the Nigerian financial institutions such as Central Bank of Nigeria (CBN) and Nigerian Stock Exchange (NSE) of the Capital Market, among others which date back to colonial times when the British government ruling Nigeria then sought funds for running the local administration.

It was after discovering that the sources (agriculture, produce marketing and solid mineral) of funds were inadequate to meet its growing financial obligations, according to ‘Capital Markets – African & Global’ by Professor Esosa Bob Osaze, that the colonial administration decided to expand its revenue base by reforming the system of revenue mobilization, taxation and other payments.

“It also saw the need to raise funds from public sector to cover temporary shortfalls in funds availability. Hence, it found it necessary to establish a financial system by setting up the basic infrastructure for its take off, pending the development of an organised private sector.”

Ever since then IR has definitively evolved quietly though, throughout the years of the formalisation of the Nigerian investment and financing instruments, specifically the money and capital markets infrastructure. The financial institutions’ structures have been on the rise with its attendant IR necessities.

IR has been there unnoticeably, helping to smoothen the understanding among every stakeholders in finance-related transactions in the country.  When compared with public relations (PR), except within the investment and financial circles, IR just as of today is considered the most quiet of the two communications competencies in the country.

Taking a glimpse of the period, it is perhaps timely to take a very brief look at how far IR practice in Nigeria has evolved. What has changed? What has remained the same? And an individual suggestions for going forward.

Developments in 1990s

The IR authority or its essence had come on the back of the rapid rise of the internet fuelling a bubble; a roaring stock market that provides capital for a wave of global merger development, until the Asian financial crisis hit with the uncertainty about how it was going to affect the global business.

Between 1997 and 2015    

Though IR in Nigeria is not yet formally or statutorily established like PR, but it is also clearly defined in terms of its perceived value, more so since in the 2000s.

The improvement of IR practice in Nigeria was spurred by bank recapitalizations policy by Chukwuma Charles Soludo-led Central Bank of Nigeria (CBN) in the mid-2000s, Obi Tabansi Onyeaso, Founder and Managing Director of Customs Street Advisors, a Nigerian-based IR advisory firm, would argue. Soon after, there was a moment of real catalyst.

In Nigeria the real catalyst came specifically in July 2004 when CBN announced that the country’s 89 banks had an 18-month deadline to raise their shareholders’ funds from under $10 million to $203 million before January 2006. At the time, the stock market witnessed avalanche of public offerings, a trend followed by companies in other sectors. Soon, Nigeria had copious public offerings.

Propelling further actions for those companies long established on the exchange, “several of whom were household names and which had long taken their senior status on the market for granted, the new rowdiness alerted them to the emerging reality: they had to reach out to be heard above the loudness. Investors now had a plethora of choice when populating their portfolios.”

“They want more information on performance, strategy, governance, and competition – you name it, they claim a right to know. Not just that, they want it delivered right to them, and faster, too,” this being the words of a CEO of one of the companies on the NSE, with whom Onyeaso had a chat sometime age.   

Consequently, every CEO of publicly traded companies on the NSE is conscious of the presence of an IR roles in the light of the consequences of information (mis)management. Investors and analysts would simply not take lightly the instant feedback around results release dates and strategic announcements.

Whether providing key insight and advice to the CEO on various topics such as strategic messaging and crisis communications or providing an informed opinion on the merits of guidance, IROs and IR consultants have evolved into the needed authority for all aspects of shareholder communications – and deservedly so.

By this time however, aided by the maturing of the industry, and given a tremendous boost by the introduction of certain regulatory clauses, IR is on its way to reaching the promised-land: gaining a seat at the expected table with the senior management.

The Very Present

The advent of technology has brought with it different ways in which IR practice could evolve, as stated below:

  •    The internet and new platforms for disclosure transforming the practice from analogue days to today’s world of releasing news via tweets, among other social network platforms
  •    Feature highly orchestrated earnings calls with live dynamic Q&A sessions
  •    The growth from printed annual reports being the norm to many more varied ways to tell corporate stories on the web
  •    Third-party perception audits changing from a few thoughtful phone calls to elaborate projects using multiple outreach methods, deep qualitative and quantitative methodology and sophisticated, actionable insight
  •    Investor days moving from simple luncheons at a hotel to elaborate multi-media events with months of preparation and heightened expectations (for both company and attendees)
  •    Investor marketing developing from a bit of a scattershot approach to highly sophisticated outreach, supported by limitless shareholder intelligence, trading data and corporate access teams clamouring for executives’ time
  •    The movement of IR from an often segregated role to being viewed as a strategic C-suite function, integral to a corporation’s strategic messaging in the age of rapidly changing social media and evolving influencers
  •    The very profound change in governance issues from a time when top issues were rather mundane to today’s ever-changing world of heightened shareholder engagement in the boardroom.

From the foregoing, it is safe to conclude that IR in Nigeria has come a long way to stay and is moving on with time. It requires the practitioners to keep it up and even begin to domesticate the useful technological development witnessed in other climes in line with the global best practices.

Please feel free to offer your views, insights and feedback.

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