Nigerian stockbrokers have identified strategies by which the Federal Government can deepen the capital market to achieve its proposed $1.0 trillion economy without increasing borrowing or deploying ways and means to finance the economy.
In a communiqué signed by the 13th President and Chairman of the Council of Chartered Institute of Stockbrokers (CIS), Mr Oluropo Dada, and the Registrar and Chief Executive, Dr Josiah Akerewusi, the Institute, in a 13-point agenda, urged the federal government to list the Nigerian National Petroleum Company Limited (NNPCL) and other moribund state enterprises on the secondary markets to deepen the markets, enhance the companies’ ability to make a profit, and generate revenue for the government through tax.
Stockbrokers had last month converged at Ibadan, Oyo State, for their 28th Annual Conference themed “Capital Market as Catalyst for the $1.0 Trillion Economy,” which brought together top decision-makers and leading Chief Executive Officers in various sectors of the economy.
Participants canvassed the need to rebase the Nigerian GDP to reclaim the country’s status as Africa’s largest economy to create opportunities to achieve the $1.0 trillion target. They noted that the informal economy constituted a significant portion of Nigeria’s GDP but remains largely untapped by the capital market.
“Policies should entail incentivising indigenous and privatised companies, as well as SMEs, to list on the Nigerian capital market. This can be achieved through tax holidays and patronage of products and services of quoted companies. The government should conclude the ongoing review of the Investment and Securities Act (ISA), while the capital market regulators should review relevant rules and laws in line with global best practices to boost investor confidence, create a favourable business environment for listed companies, and remove restrictions hindering liquidity access for stockbrokers.
“The Nigerian capital market should be integrated into fintech solutions, blockchain technology, and other digital innovations to enhance accessibility, efficiency, transparency, and attraction of Millennials, Gen Z, Gen Alpha, etc., while market operators should develop products that attract the investment appetite of technologically savvy youths. The government should address foreign exchange challenges and other inhibitions to the participation of foreign investors in Nigeria. This will also enhance Foreign Direct Investment (FDI).
“There is a huge knowledge gap among investors; hence, financial literacy programmes should be pursued with renewed vigour to expose existing and potential investors to the concept of the trade-off of risk and reward in investment decision-making. Financial literacy should cut across all segments of investors, and this requires the collaboration of market regulators with all stakeholders.
“The Nigerian capital market should reflect key sectors like agriculture, oil, and gas to better align with GDP composition and provide opportunities for capital formation and mobilisation.
Government at all tiers in Nigeria should leverage more on the capital market to raise long-term funds for infrastructural development by issuing project-tied bonds with an irrevocable standing payment order (ISPO), which removes the risk of default.”
“In order to relieve itself of perennial debt overhang, Nigeria should opt for debt restructuring and extension of the maturity period to enable it to manage its resources for the overall development of the economy. On the monetary side, the Central Bank of Nigeria (CBN) should intensify tight monetary policy to control inflation, which has been attributed to the current regime of stagflation.
“Government should exploit opportunities in the commodities ecosystem to grow the GDP. The commodities ecosystem remains a niche market in Nigeria. The government should implement the policies enunciated to strengthen commodity trading and commodity exchanges to enhance export trades, generate forex, boost external reserves, and strengthen the naira.
“Government should implement structural reforms, including deregulation, debt management, and public awareness campaigns, by collaborating with market stakeholders to unlock Nigeria’s economic potential. It should put in place policies to attract private equity, venture capitalists, and angel investors. Government at all tiers should leverage tariff policies to support local industries, similar to strategies employed by China and the USA, to pave the way for the participation of private equity, venture capitalists, and angel investors to support the growth of SMEs in Nigeria,” according to the communiqué.
