Enlisting More Foreign And Private Companies On The Nigerian Stock Exchange By Edwin Ekene

| February 21, 2013 | 0 Comments

In 1960, the Nigerian Stock Exchange was founded, but operation actually began in 1961 with about 19 securities listed for trading in Lagos where it 
was established. Like Nigeria which got her independence in 1960, but 
became a republic in 1963, the name of the Nigerian stock market
 metamorphosed from Lagos Stock Exchange, the founding name in 1960, to 
The Nigerian Stock Exchange in 1977. As a market that serves as a platform for the mobilization of funds or capital for long term investment or
 developmental projects, the exchange has many branches in cities throughout the country; Kaduna branch came in to existence in
 1978, Port Harcourt branch came in to existence in 1980, Kano branch 1989,
Onitsha branch 1990, Ibadan branch 1990, Abuja branch 1999, Yola branch
 2002, Benin branch 2005, Uyo branch 2007, Ilorin branch 2008, Abeokuta
 branch 2008, Owerri branch 2009 and Bauchi branch 2009.



As of September 5, 2012, The Nigerian Stock Exchange had about 200 
companies listed with a market capitalization of about N7.8 trillion which
is more than the nation’s entire budget for this year!



However, the market is fast recovering from the bloody nose given to it by 
the global economic crises which originated from the United States of
 America. Before the crisis, the market capitalization of the NSE was around 
N13 trillion, but when it took its own share of the compulsory global 
bitter pills, the market capitalization and other indices used in measuring
 the strength of the market shranked astronomically. Just like life, which is not fair to all, the crashed market recorded its own 
casualties; among whom were people who used their entire life savings to
 invest in the market with the belief and hope that their future will be secured and greater than their past. This shows that life has no specific formula!



Following the indifference that greeted the market from all sides after the 
economic crisis comparable only to the “Great Depression”, the Federal
 Government decided to re-jig the market through various means. Some of them 
include the exception of the Value Added Tax VAT and Stamp Duty Charges on 
transactions carried on the Stock Market. All these policy relaxations were 
meant to attract and restore investors’ confidence in to the market.

 Nonetheless, sectoral analysis of the market shows that, the telecommunication sector is under-represented. It is even more disheartening that, none of the major national telecom company’s shares are 
traded on our stock exchange market! Is it not farcical that a sector that 
makes about N90 billion on monthly bases is not quoted on the NSE? What is 
really happening to this sector? Or is it a deliberate action? Is there any
 double standard dealing somewhere? Investigations have revealed that some
 of the multinational companies whose shares are duly traded on other stock
 exchange markets are not quoted on our own stock exchange market.

Does that mean Nigerians don’t deserve to be part owners of these companies? The raison d’être behind such practice is still indiscernible to Nigerians!
 Until a cogent and verifiable reason is offered, Nigerians will keep asking
 for answers to the above questions. But, let me state categorically that, 
if it is a deliberate policy and efforts are made and sustained to ensure that Nigerians
 should not be part owners of these companies, whereas other multinational
 companies in other sectors are duly quoted on our stock market, then they should not like our money, because, you can’t like our money and deny us
 access and the privilege to be part owners of the companies that render the
 services which we consume!

 Similarly, it may be convenient to allude that they are not lacking funds 
in their operations, but the fact remains that, getting the stocks of these 
companies quoted on the NSE will give Nigerians the sense of belonging in 
the companies that do business in their backyards.

It will also push the Federal Governments to tackle poverty head-on. A booming capital market is a plus for both the government and all
 the companies doing business in the country, because, when the chips are 
down, the market serves as the nexus for the mobilization of long and
 medium term funds for business expansion or re-invention of moribund
 businesses. 

Finally, the management of the Nigerian Stock Exchange should review the 
fees charged for enlisting new companies on the exchange market. As of now reports indicate that the NSE charge 0.3 percent of the
 prospective company’s market capitalization before enlisting it on the Main
 Board of the exchange market whereas the Johannesburg Stock Exchange and 
the Nairobi Stock Exchange charge 0.04 percent and 0.06 percent of the 
prospective company’s market capitalization, respectively. Something drastic
 must be done to push the government to re-invent the Nigerian 
Stock Exchange Market!




Comrade Edwin Ekene is the National President of Young Nigerians for Change.



No. 29, Ben Mbamalu Crescent, Achara Layout, Enugu State



edwinuhara@rocketmail.com

 

The views expressed in this article are the author’s own and do not necessarily reflect the editorial policy of SaharaReporters

Culled from :Here

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