FG decides to provide forbearance to stockbrokers, says Ngozi Okonjo-Iweala
Category: Capital Market
Thursday, May 31, 2012 / MoF / The Analyst
Finance Minister and Co-ordinator of the Economy, Mrs. Ngozi Okonjo-Iweala; today said that the Federal Government will release a forbearance package to stockbrokers as part of measures to stimulate confidence in the Nigerian capital market which should hopefully increase liquidity.
This is based on the assumption that this handicap is the key hindrance to market recovery rather than the unresolved fraud cases involving key and leading players in the market.
The minister said this on Thursday at the ongoing Annual General Meeting (AGM) of the African Development Bank (ADB) in Arusha , Tanzania . What a way to address a local problem that has since snowballed since the idea was first mooted in 2010.
Okonjo-Iweala said that while government, through the Assets Management Corporation of Nigeria (AMCON), had intervened successfully and safe guarded the banks, the request for forbearance package by the stockbrokers would also be granted, though belatedly.
“We are working on the forbearance; we have now agreed on it, and that we are going to implement it. We are having discussions about how to do it”.
She goes on to add - ‘’We must remember that we don’t want any moral hazard, we don’t want those stockbrokers who did the right thing to think that they are not appreciated or that they have been neglected. So we must honour them too by looking at the type of forbearance to be accorded to the stockbrokers who are having difficulty. But there would be forbearance and there would be some conditions attached to that and we would spell that out.”
The minister, however, did not disclose when the forbearance package would be released to the stockbrokers, but assured that “the nation’s capital market will rebound”.
What she premised this on or why she choose this time to announce this was not provided in the typical ‘government speak’ and we would not expect any capital out of this statement.
If the Minister should know, she has been ‘absent’ on matters related to the capital market and its genuine concerns which goes beyond phot opportunities and grand speeches.
According to her, while it appears that it is taking government a long period, “our commitment is to make sure that we provide sustainable policy guidelines for growth and wealth creation for both the investors and stockbrokers”.
We have heard this similar speech before and wonder why it took so long to arrive at a common sense decision.
Stakeholders in the capital market had in the last two years insisted that forbearance remains the only financial instrument needed to re-stimulate market participation of operators and provide some form of ‘market liquidity’ at the Nigerian stock exchange.
The clock has started clicking on the Minister of Finances’ pronouncement.