BY MICHAEL EBOH
Following apprehension over the more than N7 trillion loss recorded by investors in the secondary segment of the Nigerian capital market since 2007, operators in the market have called for the introduction of wide-reaching measures to salvage the market and prevent a further erosion of confidence and investment in the market.

The operators in the capital market are of the opinion that if these measures are not put in place, a total erosion of investment should be expected in the near future, considering the alarming rate at which the indices have been falling.

From the clamour of the operators, the $1 trillion market capitalisation by the year 2015 target set by the NSE will remain a mirage, while other initiatives put forward by the authorities of the capital market will not yield the desired results.

Key among the measures put forward by the stakeholders is bailing out of stockbrokers, encouraging multinationals to list on the Nigerian Stock Exchange, NSE, transparent conduct and speedy conclusion of the privatization exercise and demutualisation of the NSE among others.

The value of investment on the NSE, have continued to record persistent decline despite efforts by the regulators and stakeholders to arrest the situation.

Investment value, measured by the Market Capitalisation, had peaked at N13.295 trillion as at end of 2007, appreciating by 160 per cent from N5.12 trillion recorded at the close of 2006.

Prior to that, the capitalisation stood at N2.9 trillion and N2.112 trillion at the close of 2005 and 2004 respectively.

In 2008, the capitalisation stood at N9.56 trillion, dropping by 28.09 per cent from N13.295 trillion in 2007, while it dipped further by 47.81 per cent to N4.989 trillion. In 2010, the capitalisation closed at N7.914 trillion, rising by 58.61 per cent.

However, as at the close of business, last week, the value of investment on the NSE has shed about N1.65 trillion.

In a paper titled, ‘Issues and Market Development,’ presented at the 2011 national workshop of Capital Market Correspondents Association of Nigeria, CAMCAN, in Ijebu Ode, Ogun State, Mr. Tunde Adeyemi, Managing Director, DHTL Capital Management Limited, said one of the measures that will help drive market development is the bail out of dealing member firms, going by the huge debt profile hanging on the necks of majority of the stockbrokers.

He also called for a restructuring of the debts owed banks by stockbrokers and an extension of the repayment period.

He explained that the government should bail the stockbrokers to the tune of N1 billion each, saying this will help ensure a return of activity to the market and empower the brokers to repay their debts with ease.

According to Adeyemi, bailing out stockbrokers will bring about a rebound in the market, as the stockbrokers will be empowered to undertake their core responsibility, which is the mobilization of investment in the capital market.

He cautioned the authorities against moves to make stockbrokers shore up their capital base, saying this will cause a further decline in the market.

He said stockbrokers are intermediaries and does not need an enlarged capital base to effectively discharge their duties.

In his paper titled, ‘Timely information disclosure for improved investment decisions,’ Chief Executive Officer of the NSE, Mr. Oscar Onyema called on the Federal Government to direct the Bureau of Public Enterprise, BPE, to ensure that government’s holding in the soon-to-be privatised companies are listed on the NSE immediately they are privatised.

This, according to Onyema, who was represented by Mr. Bola Adeeko, Head, Corporate Services, NSE, will help drive the recovery and growth of the Nigerian capital market and contribute in the quest of ensuring that the market becomes a barometer of the Nigerian economy.

Furthermore, Onyema stated that listing the privatised companies will create a sense of belonging among Nigerians

He called for an enabling law that will encourage telecommunications companies like GSM service providers, upstream oil companies and multinational companies among others to list on the Nigerian Stock Exchange.

He noted that getting these companies to list on the NSE will help promote the national interest perspective and ensure that Nigerians are seen to be benefiting from the wealth of these companies.

In the same vein, Managing Director, Partnership Capital Investment Plc, in his paper titled, ‘Demutualisation of the Nigerian Stock Exchange, NSE: Challenges, Prospects and Expectations,’ said the NSE will achieve its N1 trillion mark by 2015 if the privatization process is conducted in a transparent manner.

According to him, this is against the fact that a number of the privatized companies are currently performing poorly while others are going underground.

Ogiemwonyi further stated that the eventual demutualization of the NSE will bring help stem the decline in the market, as it will ensure an entrenchment of transparency and fairness in the market.

He said, “A demutualised exchange, ideally, operates in a more bottom-line focussed manner and is more capable of acting decisively and rapidly to changes in the business environment.

“Demutualisation will bring about greater flexibility to accommodate the needs of institutional investors and as a result adapt to change, while creating a structure with a greater degree of transparency.

“Demutualisation will force Exchanges to account to their shareholders not only regarding the bottom-line but on issues arising from corporate governance. As today’s competitive environment places emphasis on a stock exchange being responsive to the needs of its many stakeholders.