ensure that all interventions and assisted
funding must be issued in bonds, note form and subsequently, listed on
the Nigerian Stock Exchange (NSE).
Besides, the stakeholders observed that the growing proclivity of
Nigerian companies towards the foreign capital market for the purpose of
fundraising is not healthy for the growth of the NSE.
At less than 20 per cent to country’s GDP, the stakeholders argued
that the current size of the market constrained its role in national
economic development, insisting the time is now ripe for proper
structures to be put in place for the development of a deep and
expansive capital market in the country.
Therefore, they suggested that the government must urgently adopt
fiscal and monetary policies that would stimulate private sector
investment and increase patronage for issuance and fundraising in the
nation’s bourse.
Furthermore, a deliberate policy on incentive is needed to attract
more multinational companies in the telecommunications and oil and gas
sectors to float offerings and ultimately, resuscitate the primary
market segment and improve on the current illiquid position of the
market.
They insisted that the government must create appropriate policies to
encourage multinationals, which may not have a compelling need to raise
capital within the local environment to list on the bourse.
The apex regulator must, therefore, interface with the government to
explore various options that would facilitate the listing of all major
enterprises that occupied the commanding heights of the Nigerian
economy; especially the telco and oil and gas firms.
They observed that while oil and gas companies with significant
operations in Nigeria are heading for the foreign stock markets for
funding, the NSE remains under-patronised thereby causing the country’s
capital market to trail behind that of peer countries
The Managing Director of Crane Securities Limited, Mike Ezeh, linked
the market’s low contribution to GDP to the government’s inability to
explore the market as a vital source of accessing long term funding for
infrastructure and budget deficit.
“Government is ignorant of the huge availability of funds prevalent
in the market. With the existence of the capital market, government at
all levels- federal, state, and councils have no business borrowing
money at exorbitant rates to fund budgets.
“Again, due to lack of patriotism and corruption, many companies are
shying away from patronising the market because the market is a
transparent one and any company that lacks good corporate governance can
not play the market.
“GDP from the market is low compared to other climes. This is because
of the same low patronage. Imagine Nollywood’s contribution soaring a
lot higher than the market.”
The Managing Director of Highcap Securities, Imafidon Adonri, said
Nigerian investors and issuers’ confidence is low, noting that the
market is not even deep enough to absorb the excess inflow of funds
without bubble formation.
“The seriously inverted yield curve and the high yield on debt in
comparison with equities are sources of imbalance, thus putting equities
at competitive disadvantage. Several public policies and monetary
policies are not capital market-friendly.
“Nigerian market capitalisation is less than 15 per cent of GDP,
whereas, in some countries, it is over 70 per cent, clearly
demonstrating underdevelopment of the Nigerian market.
“The remedies to increase participation should center around
macroeconomic policies and incentives that will boost investors/issuers
confidence in the economy and Market.”
He added that various actions and activities by the authorities that
will enhance the profitability, liquidity and safety of the market would
attract more participants.
The President of Independent Shareholders Association of Nigeria,
Adeniyi Adebisi, said all indices of the nation’s economy have been on a
downward trend, noting that this is the reason behind low patronage of
the market.
“Capital Market globally has always been described as the barometer
of a nation’s economy. Capital Market does not have a soul of its own;
it only reflects the state of the economy. Investment basically
represents savings.
“You cannot save when you are struggling to survive economically.
Nigeria as a nation and Nigerians as individuals for a while has been
struggling economically. Nigerian patronage of the capital market,
therefore, is bound to below.
“The market contribution to the GDP right now is as low as 12 per
cent. The fact, however, remains that small shareholders in Nigeria
contribute less than three per cent of the total shareholding and this
percentage is dwindling.
“In a place like United kingdom, small shareholders represent above
35 per cent. This will rightly influence contributed to the GDP in that
country.
“The future of the capital market is bleak. This will be so because
there is nothing to cheer about in the nation’s capital market now and
in the foreseeable future. Steps being taken now are blind and perhaps
purposeless,” he said.
Apparently
irked by the current low ratio of Nigeria’s capital market-to-Gross
Domestic Product (GDP) size, stakeholders, at the weekend, underscored
the need for government to...Pages
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