BABCOCK JOURNAL
OF
MANAGEMENT
SOCIAL SCIENCE
Volume 1. Number 1. September, 2002
©Faculty of Management and Social Sciences, Babcock University, 2002
All rights reserved.
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Published in September, 2002
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EDITORIAL BOARD
G. K. Afolabi
-
Editor-in-Chief
M. B. Adegboye
-
Chairman
S. A. Owolabi
-
Associate Editor
A. D.Aina
-
Associate Editor
S. A. Adebola
-
Associate Editor
G. N. Okezie
-
Editorial Secretary/Business Manager/Associate
Editor
Segun Benson
-
Member
EDITORIAL ADVISERS
Prof A. Soyibo, University of Ibadan, Ibadan.
Prof O. Ojo, Obafemi Awolowo University, Ile-Ife.
Prof J. A. Ayoade, University of Ibadan, Ibadan.
Prof P. E. Oribabor, Obafemi Awolowo University, Ile-Ife.
Mr. Layi Afolabi, Wema Bank PLC, Wema Building, Lagos.
EDITORIAL CONSULTANT
Prof J. A. Kayode Makinde, Babcock University, Hishan-Remo
EDITORIAL COMMENT
This Maiden Edition of Babcock Journal of Management and Social Sciences
(BJMASS) marks a step forward in filling the gaps created by the dearth of publications
and media for the promotion of scholarship and dissemination of ideas. The "Publish or
Perish syndrome" sensitizes academics of the inherent stagnation and frustration which
must be removed from academic life in our university system. The Journal seeks to avail
academics who are desirous of achieving this, an opportunity to do so.
BJMASS therefore aims at furthering the following objectives:
a)
b)
Contributing to the existing pool of academic knowledge and skills needed for
addressing the threats and weaknesses of Nigeria's socio-political and economic
system;
Provision of strategic knowledge needed for improving the socio-political and
economic status of Nigeria in the 21st century; and
c)
Provision of workable concepts for accelerating the socio-political and
economic development of Nigeria.
While the publishers essentially catch the vision of the founding fathers of
Babcock University, it is to be noted mat views and opinions expressed in the Journal are
personal to the contributors and do not represent those of the University.
It will be the policy of the publishers to accept articles spanning contemporary
management and socio-politico-economic systems, for publication biannually by the
Faculty of Management and Social Sciences, Babcock University Ilishan-Remo, Ogun
State.
The Journal has a team of seasoned, high profile editorial advisers and
consultant. Publishers will ensure that only articles which meet laid down criteria are
published.
That the Journal meets the aspirations and wishes of all stakeholders and relevant publics,
is the sincere wish of the publishers.
Gabriel K. Afolabi
Editor-in-Chief
Babcock Journal of
Management and Social Sciences
Volume 1. Number 1. September, 2002
SECTION ONE,
Investment, The Nigerian Youth, Employment and The Nigeria Economy
1.
An Empirical Study Of A Manufacturing Finn's Capital Structure - The 7up Bottling
Company Experience. - S. A. Adebola. ............................................................................. 1
2.
Towards A Sustainable Deraocralic Culture Among Nigerian Youths: Challenges For
Religious Educationists. - Tayo Ademola S. …………………………………………....76
3.
Strengthening Employer And Employee Relationship: A Public Relations Perspective.
- Adepoju Tejumaiye…………………………………………………………………….24
4.
The Nigerian Entrepreneur: An Investor In A Developing Economy.
Okezie, Goodluck Nwokoma. .......................................................................................... 37
SECTION TWO:
Nigerian Politics, Foreign Policy Initiatives And National Development
5.
The Relevance Of The Political, Social And Economic Thought Of Obafemi Awolowo In
Nigeria And The African Continent - St. MaboUdowt Olaolu. ………………………..51
6.
Analyzing Nigeria's Role In The Economic Organs, Of The United Nations.
- M. Bimbo Ogunbanjo……………………………………………………………….... 65
7.
Nigerian Women And National Development - Veronica I. Adeleke. ............................ 73
SECTION THREE
Corruption, National Consciousness And The Nigerian Constitution
8
Corruption And Economic Development In Nigeria: The Way Forwar
- Olubusola I. Nteazue. ………………………………………………………………… 90
9
Moral Transfiguration: A Requisite For Sustaining Patriotism And National
Consciousness In The 21st Century Nigeria -Ayantayo J. Kehinde..........................….. 97
10.
The Status Of The Local Government In The 1999 Constitution Of Nigeria: An
Assessment - H. B. Adegboye........................................................................................ 106
SECTION FOUR
Government, Administration And Business Management
11.
Development Of Under-development: Historical Antecedents And Fragments Of
Evidence In Nigeria Under Obasanjo Administration -Ainu, Ayandiji Daniel………. 117
12.
Improving Committee System In Organizational Management - G. K. Afolabi.......... 125
13.
A Pragmatic Approach To The Management Of Public Enterprises In Nigeria
- Oladele Balogun. …………………………………………………………………..... 135
14. Market Development Strategies For The Nigerian Capital Market. Olujide Jackson…....... 143
SECTION FIVE
Leadership, Food Problem And Social Foundational/Ethics
15.
Spirited Leadership Within The Context Of Nigerian Socio - Political Milieu
- Olusola Owolabi. ………………………………………………………………........ 150
16.
Agriculture: Towards Alleviating Hunger And World's Food Problem
- Nwangburuka, Cyril. …………………………………………………………........... 155
17.
The Social Foundation Of Philosophical Development - Ayo Fadabtmsi. …………. . 164
18.
Profile of the Successful Visionary Leader -S.L. Adeyemi. ......................................... 170
19.
Social Integration and Mechanism for Promoting Ethical Performance at the Grassroots
Level in Nigeria - S. Ateoniyi. ....................................................................................... I78
Market Development Strategies for the Nigerian capital Market
Olujide Jackson
Effective market development strategies for the Nigerian Stock. Exchange outside the
Industrial/Commercial of Lagos and the four stock Exchange trading Centres of Ibadan, Port
Harcourt, Onitsha and Kano, must be based on knowledge of the marketing environment and
anticipation of possible changes in that environment.
This paper presents the results of a study on market development strategies in the middlebelt region in a rural, semi-urban and an agrarian economy . this reqion is one of the six geopolitical zones in Nigeria. Result indicates a high degree of awareness of capital market operations
and a consideration of the Stock Exchange as a veritable avenge for investment. These results point
to the fact that a potential market for security is waiting to be exploited and management, must
seize; this opportunity to develop strategies options in fostering the growth of a formidable capital
market in Nigeria.
Introduction
The Nigerian capital market has no doubt achieved remarkeable growth in the last two decades as a
result of the enormous expansion in its operations in terms of wider operational coverage,
increasing volume of transactions and range of services. As it today the Nigerian capital market is
one of the leading markets in Africa and thus represents a veritable vehicle for the attraction of
foreign capital for the nation’s development.
But inspite of these strings of achievements, there is, the general, feeling that the
Nigerian capital market is still underdeveloped and therefore not, yet in a position to (contribute
maximally to the development needs of the economy due to structural and operational constraints.
Some of these encomberances that have slowed down the catalytic role of the Nigerian capital
market include:
few listed securities
low demand
low trading activities
Small market size
Low level of market awareness
Lack of timely and easy access to information etc
From the foregoing, the Nigeria capital market can be described as lacking in breath (number
and variety of securities) and depth (volume and value of securities).
Thus, this study is designed to examine the strategies for increasing the breadth and depth of the
Nigerian capital market or put differently, this study is designed to examine, formulate and develop
strategies for expanding the market for securities outside Lagos, the commercial and Industrial
centre in Nigeria, and the other four trading centres in port Harcourt, Ibadan, Kano and Onitsha,
thereby encouraging the pluralism of shareholding.
Objectives of the study
Objectives of this include:
To acquaint the Nigerian public with the operations and activities of the Nigerian capital
* Dr. Olujide Jackson is a lecturer in the Department of business Administration, University of
Ilorin, Ilorin, Kwara State, Nigeria.
143
144
ii.
iii.
iv.
BJMASS VOL. 1 NO 1 SEPT. 2002
market.
Determine level of awareness of the capital market outside Lagos and the four trading
centres;
Investigate into how the breadth and depth of the Nigerian capital market can be
increased; and finally
.
Develop and recommend market development strategies for capital market securities in
the middle belt region of Nigeria.
Research Methodology
This study is limited to Kogi and Kwara States. We have chosen these states in order to
find out whether investors outside the relatively highly industrialised and commercial centres like
Lagos. Port Harcourt, Kano etc are aware of the existence and services of the Nigerian Stock
Exchange and also to be able to determine whether a market for securities exists in the less
industrialised areas of the country. These states are rural and semi-urban in nature and
predominantly agrarian.
The sample size for this study is 200 respondents from the two states stratified into six
groups based on the judgment of the researcher.
The strata and their respective sizes are as follows:
1.
2.
3.
4.
5.
6.
Company Executives
Staff of tertiary Institutions
Top Civil Servants
Top Executives of government
Business men & Women
Others
Size
20
50
40
20
20
50
200
%
10
25
20
10
10
25
100
Data were obtained through questionnaire administration; the questionnaire was divided
into three sections: the first part obtained information about the demographic characteristics of
respondents, the second part elicited information on the degree of awareness of the Nigerian Stock
Exchange [NSE] and its services while the third part enquired about the actual and potential
capability of respondents to invest on the NSE.
Data obtained were analysed using frequency distribution and Cross Tabulations analysis.
Analysis, Results and Discussions
a.
General Characteristics of Respondents
The age distribution of the sample shows that 36 respondents representing 18% fall
within the age bracket 18 and 25 years, 168 respondents (69%) are within the age bracket
36 to 50 years, while 26 respondents (13%) belong to age bracket 50 years and above.
With respect to sex distribution, 127 respondents translating to 63.5% are male while the remaining
73 respondents (36,5%) are female.
The educational distribution of respondents shows that 14 respondents representing 7% had
primary education only; 29 respondents translating to 14.5% had post secondary qualifications; 53
respondents (26.5%) obtained University and Polytechnic
BJMASS VOL. 1 NO 1 SEPT. 2002
145
qualifications, 28 respondents (14%) had professional qualifications while the remaining 76
respondents translating to 38% had postgraduate qualifications.
This distribution shows that our respondents are highly literate and should be in a
position to process whatever information is available on the NSE.
B
Analysis of responses on Awareness
The result in Table 1 shows that majority (72.5%) of our respondents are aware of the existence of
the NSE, 57% also know at least something about its services and operations and a vast majority
93.5% know what company shares and bonds are.
It is important to note that only 88 respondents (44%) know that they can own and trade
in securities easily through the NSE and only 94 respondents (47%) know that owning shares make
their assets as liquid as keeping their funds in the banks.
Out of the twenty (20) business executives that constituted part of our sample and
completed our questionnaire, 14 (about 70%) are aware that their companies could raise long-term
funds through the NSE. Out of these 14 business executives, none of them had raised any such
long-term funds from the NSE for the company.
These responses when subjected to Cross tabulation analysis in order to determine
whether observed variations in responses concerning awareness could be explained by differences
in the demographic characteristics of respondents, the results indicate that variations in the degree
of awareness of the services and operations of NSE can not be so explained. The contingency
coefficient with respect to age stand at approximately 12% at 0.39 level of significance, Sex, 12%
at 0.11 level of significance while educational background stands at 37% at zero (0) level of
significance. (See table 1 below).
However, the relationship between educational background of respondents and the degree
of awareness is found to be statistically significant even at zero(0) level of significance.
1.0
ANALYSIS OF RESPONSES TO AWARENESS-INQUIRY
Table 1: Summary of the distribution of responses to the awareness inquiry
Capital Market
No
Questions
Yes
1. Are you aware of the existence of the Nigerian Stock Exchange?
145
2
Do you know about the activities of the Nigerian Stock Exchange 114
3
Do you know what company shares are?
189
4
Do you know what bonds are?
165
5. Do you know you can own and trade in securities through the
Nigerian Stock Exchange?
88
6. Are you aware that your company can raise long-term funds
14
through the NSE?
6b. If yes, have they raised one?
0
7. Do you know you can earn dividend and capital gains by
investing in shares?
130
8. Are you aware that owning shares makes your assets as liquid
as in bank?
94
9. Do you know that investing in securities allow one to invest
when there is surplus and convert to cash if the need arises?
103
Source: Questionnaire
These questions apply only to the business executives numbering 20
relating to Nigerian
%
72.5
57
94.5
82.5
No
55
86
11
35
%
27.5
43
5.5
17.5
44
70
112
6
56
30
-
14
100
65
70
35
47
106
53
51
97
48
146
BJMASS VOL. 1 NO 1 SEPT. 2002
The above results in table 1 show that majority (72.5%) of the respondents are aware of
the existence of the Nigerian Stock Exchange . 57% also know, at least, something about its
activities. Vast majority (94.5%) know what company shares and bonds are.
It is interesting to note that only 44%, representing 88 respondents out of 200, know that
they can own and trade in securities easily through the Nigerian Stock Exchange and that only 94
respondents, representing just 47% of the total know that owning shares make their investment as
liquid as keeping them in banks.
Out of twenty (20) business executives served with the questionnaires, only fourteen of
them confessed that they knew their companies could raise long-term funds through the Nigerian
Stock Exchange while the remaining six(6) did not. Of the 14 business executives that responded
positively, none of them said his/her company had raised any such long-term funds from the
Nigerian Stock Exchange.
The above responses, when subjected to further analysis (cross tabulation and test of
significance), the results indicate that the observed variations in all the responses concerning
awareness, are not due to differences in the demographic characteristics of the respondents such as
age, sex, marital status, etc. The contingency coefficients stand at approximately 12% at 0.39 level
of significance with respect to age, 12% at 0.11 (Sex); 8% at 0.75 (Marital Status); 37% at zero
level of significance (educational background); and 4% at 0.86 (Working Experience).
From the above analysis, we can see that these variations with respect to demographic
characteristics were, however, not statistically significant. In other words, the observed variations
in the level of awareness of the respondents were not due to differences in age, marital status, sex
and working experience.
However, the exception is the relationship between the level of awareness and
educational background of respondents. The observed variation (37%) in awareness level with
respect to educational background was found to be statistically significant even at zero (0) level of
significance. The reasons are suggested in the summary of findings.
1.1
Analyses of responses to "Consideration of buying shares as viable investment option"
Table 2: Summary of the distribution of responses to "consideration of buying share"
No
Questions
Yes %
1
Do you think investing in securities is worthwhile?
141 70.5
2. If you have surplus funds, would you invest in
securities now?
139 69.5
3
If no in (2), can you consider the option later?
20 32.8
4. Would you consider it more profitable to channel
your savings into securities.
114 57
5. Now, would your company consider raising
long-term funds through the Nigerian Stock-Exchange
0
0
6. Would you advice your business partners, friends and/or
relatives to invest in securities?
119 59.5
No %
59 29.5
61
41
31.5
67.2
86
4
20
100
81
40.5
Source: Questionnaire
From the analysis in table 2 above, it can be deduced that 70.5% of our respondents think
investing in securities is worthwhile. The rest 29.5% of our respondents do not
BJMASS VOL. 1 NO 1 SEPT. 2002
147
share the same view because they are not familiar with the operations of the NSE. Meanwhile,
reacting to further questions, 20 out of those who would not invest surplus fund in securities,
confessed that the option of investing in securities may be considered in future. In other words,
32.8% of them may consider the option later, while the rest 41 respondents (67.2%) still maintained
that they would not, even in future.
Furthermore, 57% of the respondents say it is profitable to channel their savings into
investment in securities while the remaining43%, representing 86 respondents, think it is not:
because they are contented with the relative ease with which they withdraw money from banks
compared to the cumbersome processes of disposing of shares on the capital market.
From among the 20 sampled business executives, none indicated that their company
would raise long-term funds through the Nigerian Stock Exchange. Most of these business
executives said that the business they manage were private limited liability companies and not
public limited liability companies that are quoted on the Stock Exchange. In this circumstance, if
these privately owned and controlled enterprises sourced their funds through such avenues it would
amount to a gradual erosion of ownership and control. Others claimed that their outfits were owned
fully and controlled by the state governments, who are also responsible for their funding.
Finally, 59.5% of the respondents accepted that they could recommend investment in
securities to their business partners, friends and/or relatives. Those who do not, rely on the assertion
that they do not want to be blamed for the woes, these people, mentioned above, may encounter if
they did and the prices of such company shares collapse.
Subjecting the above responses to further analysis [cross tabulation and significant test],
the following contingency coefficients were obtained: age stands at approximately 20% at 0.38
level of significance; Sex, 8% at 0.32 level of significance: Marital Status, 11% at 0.52 significant
level: Educational background, 20% at 0.15% level of significance. While working experience,
21% at a significant level of 0.03.
When the results above were subjected to tests of significance demographic
characteristics were not statistically significant. But when tested against both Educational
background and working experience, they were statistically significant at 0.15 and 0.03 level of
significance respectively. This result may be explained by differences in exposure to various
investment options by our respondents given working experience and horizon
4.3
DISCUSSIONS
From the above analysis, the level of awareness of capital market activities in the middle
belt region of Nigeria could be considered high and one could infer from the results that the attitude
of middle belt towards the Nigerian Stock Exchange [NSE] is favourable, Company Shares, Bonds
and accruing dividends and capital gains is appreciably positive. However prevailing problems
stem from the low awareness level concerning trading in securities through the Nigerian Stock
Exchange, maintaining liquid assets through holding of securities, and finally the most disturbing
part is that at this critical stage in the economic development of Nigeria, 30% of the samples
company executives do not know that they can raise long-term funds through the Nigerian Stock
Exchange: even-2 of the 20 respondents confessed they know nothing about NSE.
Out of the rest 70% who are aware of long-term funds through the Nigerian Stock
Exchange, it is surprising that none said they already raised one. Furthermore, the significant
variation, revealed by the rest of significance, in awareness level with respect to educational
background may have stemmed from high level of illiteracy. The question
148
BJMASS VOL. 1 NO 1 SEPT. 2002
then is how could the capital market oil the wheels of economic progress in this part of Nigeria?
Taking us to model markets of the American, Smythe [1992] says "most Americans
participate directly or indirectly in the capital market. Over 30 million Americans or roughly one of
every five adults own stock directly... direct ownership in the stock market is not limited to the
wealthy". But in Nigeria, only very minute fraction of the public participate and those belonging to
the small fraction are the wealthy, privileged and enlightened few, which should not be the case.
Furthermore, on the issue of consideration, majority think investing in securities is
worthwhile and that if they had surplus funds, they would invest in securities since they believed it
was profitable.
The only consideration problem exists among business executives who, in their totality,
turned down obtaining long-term funds though the Nigerian Stock Exchange.
SUMMARY OF FINDINGS
1.
2.
3.
4.
The results of analysis and discussion of responses to various questions posed to our
respondents indicate that capital market awareness varies with level of educational
background with the least educated being the least aware;
Consideration of buying shares by respondents as a viable investment option is still generally
weak for all categories of respondents;
Virtually all the corporate respondents are aware of the possibility of raising cheap long-term
funds from the capital market but it is shocking that none of them has given the option a
consideration and
A potential market for securities exists outside Lagos and the four Trading centres in Port
Harcourt, Ibadan, Kano and Onitsha and is waiting to be tapped.
RECOMMENDATIONS
In order to encourage participation by all Nigerians in the activities of the NSE,
irrespective of their position in society, the following market development strategies are
recommended. These include:
1.
2.
3.
4.
Organisation of lectures, seminars, workshops, group visits etc, by any of the actors within the
Nigerian Capital market especially the self-regulatory organisations such as SEC, NSE and the
Chartered Institute of Stockbrokers[CIS], to acquaint people with capital market activities.
Informative and awareness creation advertisements concerning the capital market are virtually
or totally absent in the local media. Adverts that highlight the activities of the market should
be placed in appropriate media, through which the public can access information. Common
media, such as television, radio, print media, should be increasingly employed since they
usually command the attention of millions of Nigerians;
The Nigerian media, as part of its contribution to the economic development of the nation,
should also embark on an intensified publicity of the activities of the stock market, making
known available securities, their characteristics, benefits and risks.
To increase the breath of capital market, large family businesses should also be encouraged
and motivated to quote their shares on the stock exchange, citing conglomerates and
multinational companies that started as family businesses but went to the capital market later
in developed countries. In this regard, proprietors of
BJMASS VOL. 1 NO 1 SEPT. 2002
5.
6.
149
large family, businesses such as Doyin Group of Companies, Dantata Group of Companies
and a host of others scattered all over Nigeria should be encouraged to enlist on the NSE.
Pluralism of share holding should also be encouraged for it would broaden the width and
depth of the capital market. This can be achieved if governments at the various levels direct
the financial institutions to grant loans to buyers of shares particularly the shares of privatised
firms: and
Finally creation of more capital market instruments should be considered and a shift in
emphasis to the intensification of rural enlightenment programmes.
CONCLUSION
Our discussion to this point indicates that the Federal Government of Nigeria and the
operators of NSE have a lead role to play in fostering the growth of a formidable capital market in
the West African Sub-region in particular and Africa in general, management of the NSE must be
encouraged to increase the size and scope of the market and invest in modern facilities that would
expand its capabilities to cope with the challenges and volume of activities connected with the
privatisation and commercialisation programmes of the present administration. The success or
otherwise of the privatisation programme is heavily dependent on the ability of the NSE to exploit
the opportunities for market development for securities in the middle-belt region of the country.
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