January 06, 2012 / Omole, Lagos
The Editorial Board of Proshare and its Advisory Board has approved the release of three (3) main reports in Q1 2012; in part fulfillment of its objective of building a critical bridge towards the attainment of the Nigerian market’s goal of achieving the $1 trillion capitalisation mark by 2016.
This weekend, Proshare will release “The Nigerian Capital Market Report for 2011” - an annual review/outlook of the capital market which is available for free on http://www.proshareng.com
A second report will be issued later in the month titled “A Review of Arunmah OTEH’s Two Years in Charge of the SEC” published under our Days After Report Series. Here we will present a timeline and impact assessment/analysis of her stewardship since the landmark intervention in 2009 - to address the leadership crisis that plagued the capital market and eventual meltdown.
The report should interest market stakeholders who would benefit from a holistic review of the tenure of the apex regulator. It offers a documented record from which lessons can be extracted and insights gained on what is now needed to move forward the change agenda.
From the work done so far, it becomes obvious that the market has to adjust its assessment criteria of regulators from a purely quantitative basis as defined by the stock market performance (closing ASI position as at year-end) to incorporate a qualitative review of factors that have hitherto not been a parameter for such informed assessments.
Having said that, it would appear that the regulators of the Nigerian market face an uncommon challenge in achieving consensus on such key variables such as clarity of rules and concurrent enforcement, delineation of roles and responsibilities on product and market development, risk based regulation, as well as investor protection issues.
Arising from the work done, it was apparent that execution of plans to deliver an efficient market that is able to provide adequate capital formation and growth-based initiatives required to power the fiscal economic reform agenda of government remains unclear.
This variable is considered crucial and relevant to the Nigerian economy which entered a new and uncharted phase following the formal removal of subsidy on PMS (preparatory to the full deregulation of the largest revenue earner for the Federal government). Naturally, the economy will require a conscious structural reform driven from a fiscal framework.
Our apex regulators must therefore embrace the responsibility to play a vital role in shaping this framework in order to ensure that the necessary linkages between the capital market and the economy is established and entrenched.
If we are going to turn our economy around, the fiscal framework must be premised on a growth-inclusive strategy that discourages ‘the hot-money mentality’, provides incentives and sanctions alike to establish linkages, and utilizes the capital market to create an opening for the wealth opportunities in our economy to both institutional and retail investors.
Thus, the third (3rd) report to be released in February 2012 would focus on “Capital Formation and Growth in Nigeria: Achieving the $1 trillion Capitalisation Goal”.
This report is conceived with value to the market in mind. At the very least, it should offer the general public a ‘clear-the-air’ insight on how, why and what benefit is available to all parties in encouraging players in critical sectors of the economy to list on our restructured and refocused capital market.
It would attempt a role and responsibility definition for the NSE, SEC, National Assembly, Ministry of Trade & Commerce and the Ministry of Finance on how it can provide a clear and unambiguous set of rules that local and foreign players can relate to; using best practice benchmarks.
At the very least, the report would provide a compelling case for the arguments, justification, methodology and dynamics for establishing a nexus between the growth sectors of the economy and the capital market in such a way that it serves as a boost to both the existing and potential companies involved in the sectors so identified. The economic benefits to the country would also be highlighted.
The report is divided into six (6) broad sections covering the economic, business and market case in uncommon details.
1. The Global Economy & Capital Markets
1.1. Global Economic Developments
1.2. Global Financial Crisis and Developing Countries
1.3. International Oil and Food Prices
1.4. Trends in Developed Capital Markets & Changes to Economic & Business Models
1.5. Trends in Emerging Capital Markets & Changes to Economic & Business Models
1.6. Government Policies to Promote Development of the Capital Markets
1.7. Global Economic Outlook
2. The Economy of Nigeria & Capital Formation - An Overview
2.1. Nigerian Economy in 2011 and Outlook for 2012
2.1.1 Performance of Key Macro Economic Variables
2.1.2 Real Sector Performance
2.1.3 Monetary Policy Disposition
2.1.4 Performance of the Naira
2.1.5 2011 Federal Budget Performance Review
2.1.6 2012 Federal Budget: Low Capex, Infrastructure
2.2. Macro-Economic Trend
2.2.2 Labour Force & Productivity
2.2.3 Oil & Gas
2.2.4 Financial Services
2.2.6 Power & Energy
2.2.7 Telecommunications & ICT
2.2.10 Construction & Building
2.3. Foreign Economic Relations
2.3.1. External Trade
2.3.4. Foreign Investments
2.3.5. Sovereign Wealth Fund
2.4. Economic Reforms
2.4.1 Economic Development Reforms
2.4.2 Energy Sector Reforms
2.4.3 Oil & Gas Sector Reforms
2.4.4 Financial Sector Reforms
2.4.5 Capital Market Reforms
2.5. Capital Formation & Linkages
3. The Nigerian Capital Market Performance and Prospects
3.1. The Anatomy of the NCM – Depth, Liquidity & Capital Formation
3.1.2 Technical issues
3.1.3 Timeline of Key Developments in the last 5 years
3.1.4 Trends and Activity Review
3.1.5 Market Confidence Pulse
3.1.6 Outlook for 2012
3.2. Market Sector Review
3.2.1 NSE Sectoral Indexes
3.2.2 New Market Segments Reviewed
188.8.131.52 Observations & Missing Linkages
184.108.40.206 Fast Growing Economic Sectors v. Market Segmentation
220.127.116.11 Key Players & Economic Value Creation
3.3. Current Challenges
3.3.2 Number of Participants
3.3.3 Market Infrastructure
3.3.4 Product DiversityCentral Bank of Nigeria
3.4. Industry Regulators & Practice Enablers
3.4.1 Securities & Exchange Commission
3.4.2 Nigerian Stock Exchange
3.4.3 Central Securities & Clearing Systems
3.4.4 Central Bank of Nigeria
3.4.5 Federal Ministry of Finance
3.5. The NCM Compared
3.5.1 With Global Indexes
3.5.2 With African Indexes
3.6. How best to deepen Nigerian Capital Market
4. The Telecoms Sector – Case Study
4.1. The Telecoms Industry in Nigeria
4.1.1 The Economics of GSM Companies
4.1.2 Contribution to the Nigerian Economy (GDP)
4.1.3 Inherent Opportunities and Outlook
4.2. The Comparative Place of Telcos in Developing Economies
4.2.1 Telco Industry and the Capital Market
4.2.2 Telco Industry in Africa
5. The Planned Bill and the Business Question
5.1. Case Study - The Telecoms Industry in Nigeria
5.2. The Case for Listing & Concerns from Existing Companies
5.3. Lessons from other Jurisdiction
5.4. Specific issues for considerations in any planned listing
5.5. Limiting Factors
5.6. Expected Changes to listing Rules
5.7. Incentives to Encourage Specific Sectors
5.8. Listing Models for Various Sectors
6. The Planned Bill
6.1. Proposed legislation – Combination of Incentives & mandatory Provisions
6.2. Linkage to Economic Vision 20: 2020
6.3. Possible areas of Harmonization – CAMA, ISA and FIRS laws
Broadly speaking, it is our desire and expectation that you will join us in making this document an aide memoiré to those involved in the decision making process.
The above reports will be anchored by Mrs. Reshu BAGGA ably assisted by Taiwo Ologbon-ORI, Saheed KARIBE and external support from independent research and economic thought led consultancies such as Value Fronteria, headed by Dr. Martin OLUBA.