Nigeria’s largest professionals in the capital market, stockbrokers, have called on the governments and all stakeholders to show keen interest in the roles of the capital market as a catalyst for national development.
Celebrating the 61st anniversary of Nigeria’s independence and the formation of the Nigeria’s stock exchange, stockbrokers commended the contributions of the capital market to Nigeria’s economic growth and urged for increased recognition of the market in fiscal, monetary and legislative agenda of the governments.
The Nigerian Exchange (NGX) Limited, formerly Nigerian Stock Exchange was incorporated in 1960 but commenced business in 1961.
Stockbrokers under the aegis of the Chartered Institute of Stockbrokers (CIS) and Association of Securities Dealing Houses of Nigeria (ASHON) yesterday identified some challenges and the way forward for the Nigerian capital market at 61.
They explained that the market had contributed significantly to the growth and development of the economy but a lot should be put in place to operate optimally in the current tough environment.
President, Chartered Institute of Stockbrokers, Mr Olatunde Amolegbe in a statement explained that the market size relative to the economy was abysmally low.
“ It’s not heartwarming to say that the Nigerian capital market, relative to the size of the country’s economy, is still abysmally low, as the equity market capitalization to GDP ratio stands far below 20 per cent, in contrast to the South Africa’s 348.3 per cent and Brazil’s 68.4 per cent. The ratios in the key developed economies are in excess of 100 per cent.
“The participation of Nigerians in the capital market is very low. Less than five per cent of the country’s population are involved in the market as investors, while less than one per cent of registered companies are listed.
“Despite the tough operating environment, the Nigerian stock market was adjudged the best in Africa and Number three in the world in terms of return to investors in 2017. Three years later, in 2020, the market was adjudged the best in the entire world,” Amolegbe said.
He advocated for a review of the enabling legal frameworks to encourage the local pension funds to significantly increase their investment in the Nigerian equity market.
According to him, an institution like the CIS which is primarily responsible for training and certification of individual practitioners and propagation of capital market literacy across the country requires financial support such as grant from both government and market regulators to support the drive.
“The National Assembly should give expedited hearing and passage to the proposed Chartered Institute of Securities and Investment Market (CISIM) Bill which will properly update existing legislation to be at par with the realities of the global capital market,” Amolegbe said.
Chairman, Association of Securities Dealing Houses of Nigeria (ASHON), Chief Onyewenchukwu Ezeagu noted that the market’s challenges emanated from ‘buy and hold’ attitude of many investors and the lack of synergy between the regulators and operators.
He pointed out that ‘buy and hold’ attitude of many investors was as old as the market, attributing this to ignorant of dynamics and benefits of investment in shares.
“The challenges of the Nigerian capital market run in tandem with the challenges of the country giving credence to the belief that the capital market is a barometer of the economy of a nation. However, the market has stood the test of time despite the huge challenges of an underdeveloped country and some peculiar problems.