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Stock Exchange in Nigeria started well, Kurfi

Bashir Adefaka

Alhaji Garba Kurfi is the  MD/CEO, APT Securities and Funds Limited, member of the Nigerian Stock Exchange. In this interview with Saturday Vanguard Business, he reflected the good days of stock exchange in Nigeria. Excerpts:
How would you describe the capital market in Nigeria?


Anybody that looks at the capital market in Nigeria  will believe that we have gone far.  We have attained a certain level whereby no matter what you think, you will still thank God.

This is the industry that is almost 50 years, from the inception to date, and except in 1997, 1998, 1999 and what we experienced in 2008, 2009 and 2010, our own shares were  positive.  And this is the market that started with less than 15 securities . Today, we are proud of not less than 300 securities outfits in the whole country.

This is the market that started  with almost nothing and then apart from Lagosians, nobody else played the market.
When and how did capital market start as a business in Nigeria?

It was by the grace of the General Yakubu Gowon’s  regime through the vision of the late Chief Obafemi Awolowo, who came with the 1973 indigenisation decree.  That was the beginning of the capital market in Nigeria.

I remember at that time, business bodies like Nigerian Bottling Company, UAC, many of them, were compelled to divest from their funding with the general public of Nigeria. UAC then  issued one million units to each of these. That is why today, there is no state in this country that doesn’t have a shareholder of the UAC and this was by the virtue of the 1973 decree.

How has that benefited ordinary shareholders?
An investor who invested just 5 pounds in 1973, which is equivalent to N100; today  has shares worth N7 million by the virtue of investing in Nigeria Bottling Company.

This is so with most of  the people, particularly in the South-West and that was the beginning of their becoming rich and that was the beginning of the patronage of capital market.  That is why a lot of them can today proudly send their sons and daughters abroad to study.  You see, this is from the investments they got by the virtue of 1973 decree and that’s how the market started operating beyond Lagos.

In 1976, a decree came by which we had other companies like Nestle Foods; we had oil companies like Mobil, Total and even Textile industries.

They were all compelled to, not only be quoted but also to relinquish up to 40%, some up to 50%, some up to 60% to the Nigerian populace.  That’s what made quite a number of them participated in the capital market.  And today, a lot of them became shareholders of Nestle Foods, Total, Mobil, by virtue of the 1976 decree which compelled these companies to release some parts of their holdings to them.

Then, when we came to 1989/1990 when the Bureau for Public Enterprises came to be, from that time, the Federal Government discovered that there is no business where you can do better.  So, all the hotels, the banking industry and many other companies decided to relinquish and that was the beginning of the problem of the market and it was when the people came to realise the intricacies relating to capital market.  Most of the investors were allotted shares through constituency down to the Local Government.

First Bank was trading at N2, UBA at about 78 kobo, many of them and many Nigerians are today proud of BPE privatisation.  That was the beginning of our challenge and those companies started declaring huge profits, dividends for  so many investors.

Companies like first Bank, Union Bank, UBA, Afribank all became more efficient and more competitive than ever before.  The directors  know the business and the fact that it  has to be done in such a manner that will be profitable.  Now, the business people are in charge without  appointment by the  government.

What change has the business witnessed over the time?
By 1997, our trading completely changed from what we called the call-over system, where each stock would be called and the broker would shout to make a price, to what we now call a new price driven by the machines and that is how we are able to get our priority right.

The number of  issues increases, volume increases, market becomes more liquid and more liberal and people are no longer waiting for the shares certificates because, you can buy today and sell tomorrow.

It has become an issue today that even some of the embassies will ask you to bring your statement of stockholding and based on that, they can give you visa.  A lot of customers have tried it and they are succeeding.

The stock brokering firms up till 1980 were less than ten dealing members.  Today, we are up to over two hundred and fifty dealing members.  The volume that used to be traded, has increased. Before now, we were talking of five, ten million but today we are talking of billions.

The share capital that was running in millions moved to billions and now, we are talking of  trillions.  And the participation of the capital market vis-à-vis the Gross Domestic Product (GDP) increased tremendously.  Before, we were playing less than 1%, today the market is playing between 14% to 15%; at times they are even above.

When you look at the capitalisation, it’s something to be proud of.  We are talking of trillions. As far back as 2008, we were talking of 12 trillions; that is the old shares capitalisation in the market.  These days, you are talking of more than three, four times of the international budget and if you look at it and compare it to GDP, it becomes something to  reckon with by some international investors.

Before that, a decree done by General Sani Abacha, opened up the door of the capital market to foreign investors and from then, the foreign investors started playing.  And today, we have International Financial Corporation (IFC), we have many of them coming in and playing the market.

So when you look at where we started and where we are today, we have nothing to regret but to say we thank God.
And don’t forget that out of the fifty years of activities in this market, with the exception of 1997, 1998, 1999 and 2008, 2009 and today, our market has never  recordedbad investments.  We are getting a lot of capital gains.


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