Business
Analysts Fault Share Re-denomination
The recently proposed plain to re-denominate the nominal value of shares by the Nigerian Stock Exchange (NSE) is seen as an unnecessary exercise by capital market analysts. The Exchange’s authorities has revealed plans to change the per value of shares from the 50 kobo it is now to N1: A major reason given for the plan is the need to firm up the market, make it more compact and efficient by streamlining the share structures of quoted players. This, it is believed, would help pricing and restore investor confidence.
Investigation carried out revealed that some market operators are not excited by the plan due to the fact that not all the companies on the floor of the Exchange have bloated share structures.
The Assistant General Manager of NSE, Mr. Sola Oni, had described the move as a “good development for the market”. He said that stakeholders would be invited for the issue to be deliberated upon before the implementation.
Mr. Samuel Olayemi, a consultant with perfection Nominees Limited, noted that it is an unnecessary exercise to embark upon. He said that companies were listed at their nominal value after a conclusion, was made that all should come into an equilibrium whereby all of them would be rated at the same nominal value of 50 kobo ordinary share.
He observed that moving the nominal value to NI is asking the companies to go into unnecessary expenditure. “The book value of the companies would not change but they would have incurred unnecessary costs”, he said.
Mr. Funmi Abiodun, a stockbroker with Supra Commercial Trust Limited, pointed out that the implication of this initiative is that the volume of shares in the market would be reduced by 50 percent while the par unit price of the stocks would double.
Abiodun suggested that companies with large volumes of shares be allowed to undergo share reconstruction in their own interests and should not be a forced action for all companies in the capital market.
The National Chairman of Pregressive Shareholders Association of Nigeria, Mr. Boniface Okezie, said that the exercise would add no value to the investment of shareholders on the floor of NSE.
He noted that going by naira value as the nominal value for stocks should mean that companies should also pay dividend in naira value, which he did not see happening, especially in the insurance sector.
He advised that instead of the exercise share reconstruction should be carried out by companies with bloated shares while the ones with lesser share structure should apply sharebuy-back.
The facility will be disbursed through participating Microfinance Institutions (MFIs), which will in turn extend the loans to their customers, particularly SMEs, as they directly interface with businesses at the grassroots level.
The Executive Director of COMCIN, Mr. Micheal Ogbaa who represented the Chairman, Dr. Iredele Oyedele (FCA, FCCA), said the initiative is designed to strengthen micro-lending institutions and expand access to finance for grassroots entrepreneurs, particularly women and youths in the informal sector.
Ogbaa explained that COMCIN does not lend directly to individuals but works through its network of microfinance and cooperative institutions, which in turn provide loans to end users.
“We came together to advocate for the microfinance ecosystem. Commercial banks often exclude people at the grassroots, but our members are positioned to reach them. This facility will empower them to do more,” he said.
He noted that the loan scheme offers low interest rates and flexible repayment plans, making it more accessible to small business owners.
According to him, about 90 percent of beneficiaries are expected to be women, who play a key role in sustaining families and driving economic activities at the local level.
“Our focus is on traders, service providers, and players in the informal sector. These are the real movers of the economy. By supporting them, we are strengthening families and contributing to national development,” he added.
Ogbaa disclosed that eligible SMEs with proven integrity and business track records could access up to N5 million each through participating micro-lending institutions. The rollout has commenced in Lagos and will extend to Abuja, Enugu, and other regions, including the South-West, South-East, and North-East.
He said 12 micro-lending institutions have already benefited from the scheme, while 85 applications are currently being processed under the pilot phase.
“Our target is to reach at least 100,000 SMEs nationwide. We are building a platform that connects funding partners with credible micro-lending institutions, creating a reliable channel for financial inclusion,” Ogbaa said.
He added that COMCIN is also working to attract larger funding pools from development finance institutions and private investors, noting that successful implementation of the pilot phase would boost confidence and unlock more capital for SMEs.
“We have seen encouraging testimonies from early beneficiaries. As we demonstrate transparency and efficiency, more institutions will be willing to channel funds through us,” he said.
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