February 16, 2012 / Herman Hembe
BEING A SHORT ADDRESS BY HON. HERMAN HEMBE, CHAIRMAN OF THE HOUSE COMMITTEE ON CAPITAL MARKETS & OTHER INSTITUTIONS AT THE CAPITAL MARKET SOLICITORS ASSOCIATION OF NIGERIA (CMSA) FORUM HELD AT BABALAKIN & Co. ON THURSDAY, FEBRUARY 16, 2012
Dear Members and Distinguished Guests, ladies & gentlemen,
Let me thank you for this privilege to join in what, I expect, would be a frank intellectual discourse on ‘the critical issue’ confronting our generation with regards the development and sustainability of the Nigerian Capital Market.
My address will be on a topic which is on the front burner today and which is in issue in today’s gathering too. This is the call for direct engagement of stakeholders on how we intend to deliver capital formation and growth in Nigeria .
When I received the invitation to attend this event and found out that the theme chosen is “Re-awakening the Capital market through Participation of key Players in the Economy” to be delivered by my friend, Mr. Oscar Onyema, CEO of the Nigerian Stock Exchange, I knew I would definitely be coming, as this would present an opportunity to kick-start the discourse on this all-important issue.
Even at public hearings of parliament, the quality of distinguished stakeholders in attendance here may not be easily achievable.
My job here will be to listen and learn from this gathering, how we can harmonize positions to achieve the $1 trillion capitalisation goal of the exchange; and how also, we can achieve some of the indigenous growth inclusive measures under consideration for the Nigerian economy.
I am sure you all aware of the determined position of the House of Representatives, working through my committee; to provide legislative backing for the compelling economic case 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.
This move has naturally generated commentaries from stakeholders and the media. The discussion started is a healthy one in my view and perhaps I should use this opportunity to make some clarifications.
The use of the word compulsory to describe the approach envisioned did not emanate from us. We are all too conscious of the need to create an enabling environment for businesses to thrive and would rather work towards a situation where a combination of incentives and regulation is deployed to achieve our goal.
To engender a willingness to participate, we should provide legislation that covers incentives unbundling of stringent eligibility requirements that create high barriers for potential entrants and hinder participation by willing businesses and the adoption of options that promote foreign investments in our economy under terms that support our national interests without exposing the market to the dangers of the past.
The overall goal of the project is to ‘deepen’ the equities market and ‘support’ the wealth creation initiatives of the Nigerian Stock Exchange in a manner that allows it reflect and complete the economic loop between key economic sectors and market segments on the bourse
What needs to be done is very clear to us and the general consensus is that the reforms being discussed is targeted at the development gaps that exist in our economy. That should not be too difficult to appreciate and research backed reports available to us will indicate that examples abound in other climes where such steps actually support the survival of the business community and economy.
The House Committee intends to work closely with the NSE, SEC, Ministry of Trade & Commerce, the Ministry of Finance and other stakeholders in providing fiscal and legislative backing for a clear and unambiguous set of rules that local and foreign players can relate to; using best practice benchmarks.
Permit me to state here the obvious fact that the market in Nigeria is in a state none of us present here can be proud of. Coming from its glory days of 2007, it is very near collapse today. This downward trend has been largely due to the fact that our nation’s stock exchange is relatively small and unrepresentative of the size of the Nigerian economy. It is underdeveloped, illiquid and operates isolation from other markets.
Parliament needs to lead the fray and is doing so to ensure that national economic growth engendered via the capital market. We are in the process of looking at a bill, having useful engagements within parliament and with other stakeholders that will lead to the passage of the bill to an act we can all be proud of.
Our targets in this bill, at this time, include players in the following sectors:
2. Power and Energy
3. Oil and gas
6. Solid minerals, and
7. Others that further consultation may bring about.
These measures will grow our economy by ensuring that a substantial amount of what is generated in Nigeria is stays in Nigeria . It will grow the market and rapidly encourage the ordinary Nigerian investor to get into the market again. It will also cause a great reduction in the eventual eradication of corruption of poverty.
This is a generational responsibility that must be met and this intervention by the House under my chairmanship of the committee on capital markets would once more signpost our resolve to rise up to the developmental challenges we are confronted with.
This we can achieve with relevant stakeholders.
As the chairman of this occasion, I encourage every participant to avail themselves of the opportunity which this forum creates to engage in a robust discussion that will herald-in the needed reform of the industry/sector.
Once again, I thank the organizers of this occasion and wish us all a worthwhile discussion.
Hon. Herman Hembe