Capital market stakeholders set agenda for finance minister,
list expectations
APPARENTLY irked by the comatose state of the Nigerian Capital
Market, especially the persistent share price depreciation in the stock
market since 2008, stakeholders over the weekend set agenda for
Prof. Ngozi Okonjo Iweala, who has just assumed office as the new
finance minister.
Specifically, they argued that urgent attention is needed in the NCM to
save it from degenerating into another bubble by addressing problems
that are inimical to its growth and has continued to deepen both
foreign and local investor’s apathy in the market.
The Chief Executive Officer of Lambeth Trust & Investment Co Limited,
Mr. Imafidon Adonri said the economy is currently structured towards
short term trading activities that fuel short term finance provided by
the banking industry.
Therefore, he noted that for the capital market to blossom without
suffering another bubble, the economy under the new minister needs
to be restructured towards long-term productive activities where the
capital market is most relevant.
According to him, this will begin with privatisation of government
enterprises in the heavy industrial sector of the economy and setting
the stage for massive private capital formation in them.
To reverse current crowding out of the private sector from credit due
to persistent sale of FGN bonds and treasury bills, fiscal authorities he
said need to pursue policies of balanced budgeting.
Further more, Adonri, who noted that the secondary market of the
stock market has assumed a measure of stability hovering around an
All-Share index of 24,000 points post global financial meltdown
however explained that the dormancy of the primary market for
equities indicates that full confidence is yet to be restored.
He noted that if market fundamentals improves remarkably through
growth of corporate earnings, profitability of investments can attract
more investors to the market.
He, therefore, submitted that through creation of enabling
macroeconomic framework and environment for businesses to flourish,
fiscal authorities can contribute towards full recovery of the capital
market.
Finally, Adonri added that the minister is expected to redress the
hijacking of FGN bonds and AMCON bonds by the Over the
Counter market created by Dept Management Office primary market
dealers by migrating trading in them back to the platform of The NSE
where retail investors can fully participate.
Also, Tunde Oyediran, a market consultant with Deloy Consulting
Limited urged the minister to address unethical practices like
embezzlement, inflated contracts, overbloated costs of governance
plaguing the ministries and parastatals by putting in place measures
that will curtail these excesses.
“Infact as we are putting codes of corporate governance in place for
capital market players, we expect similar codes for government
ministries, parastatals and its agencies. They must be accountable to
the people.
“Stakeholders expect to see a result oriented Finance Ministry. A
ministry that really know that really know that it is saddled with the
responsibility of watching, monitoring and curtailing the activities of
financial market regulators, the Central Bank of Nigeria and the
Securities & Exchange Commission so that their actions and policies
will not spell doom for the economy.”
“Their efforts must be collaborative and must be directed at building a
prosperous nation and not the one that impoverishes its citizens as
recently experienced.”
Speaking further, Oyediran said the minister is expected to use her
position to attract foreign direct investment in the capital market and
the nation at large.
“We are hoping for a minister that will be concerned in All-share index
and other metric indices of the economy. A minister met the ASI at 26
basis points and left it at 23 basis points, so bad.
“The attendant effects of this are grevious, as can be seen in loss of
capital, income, jobs and properties of stockbrokers and investors. We
can not wait any longer to see the resumption of “our saviour,’’ who
will redeem us from many ailments plaguing the capital market and
the nation.”
For the chairman, Progressive Shareholders Association of Nigeria, Mr.
Boniface Okezie, unless government begins to tackle the problem of
infrastructure, we cannot expect a meaningful growth in the Nigeria
capital market.
Okezie noted that the bullish rally record in the market at the
beginning of the year could not be sustained due to the poor state of
infrastructure.
He, therefore, charged the new minister with the responsibility of
putting adequate infrastructure in place in the market, adding that
when adequate infrastructure is put in place, the economy grows,
quoted companies would record improved performance, declare profit
which would impact positively on the market.
An independent investor, Mr. Amaechi Egbo urged the new minister to
ensure that there is liquidity in the market through the provision of
fresh fund to mop up excess shares in the market, noting that it would
go a long way to restore investors’ confidence in the market.
By Helen Oji
GUARDIAN July 25, 2011