Weak Governance Threatens JSE, NSE Relationship


By Goddy Egene, 06.01.2010 

 Indications emerged last weekend that the weak corporate governance in the Nigerian capital market is discouraging the Johannesburg Stock Exchange (JSE) Limited of South Africa from partnering with the Nigerian Stock Exchange (NSE) and quoted companies.


As part of its long-term strategies to promote the growth of capital markets in Africa, the JSE in February 2009 launched the African Board. But Business Development Manager, Africa Desk, JSE, Mr. Geoff Musekiwa, told THISDAY last July that they were eyeing some companies in Nigeria to list on Africa's biggest bourse. Oando Plc is the only Nigerian firm that is currently listed on the main board of the JSE Limited while Pinnacle Point Group is the only South African firm listed on the NSE.


However, prospects of more Nigerian firms listing on the JSE appears slim following issues of corporate governance raised by the Chief Executive Officer of JSE Limited, Mr. Russell Loubser. Reuters quoted Loubser as admitting looking towards having a robust relationship with the NSE and quoted companies but complained about poor corporate governance.


After calling off a deal to buy a strategic stake in the Mauritius Stock Exchange last March, Reuters asked Loubser other plans they had in mind - including looking into Nigeria's way.  And he said: "There are possibilities there and Nigeria is too big to ignore but at the same time Nigeria has a lot to do about things like corporate governance. We will continue to look at that part of the market but it is not without its dangers."Musekiwa had last July told THISDAY that discussions were on with many companies across the continent to patronise the African Board in order to enjoy the attendant benefits.


“We have been to Nigeria, had discussions with regulators, operators and companies. We are hoping to get some listing from Nigeria. Oando Plc that is listed on the JSE has enjoyed tremendous exposure and we believe more Nigerian firms should have access to the JSE for more exposure,” he said.He said that the African Board has been developed to attract foreign capital to the African market, by allowing investors access to the very exciting opportunities that exist in Africa. During the launch of the African Board in 2009, Executive Head for Africa at JSE Limited, Maureen Dlamini, said it will list only African companies. She said: “Foreign investors approached the JSE looking for ways to diversify their portfolios and the African Board is a response to that expressed need.”


She listed the benefits of getting listed on the African Board to include increased trading hours and greater exposure, increased liquidity (which is attractive to foreign investors); improved product offering, strategic positioning for the rest of Africa as well as  the favourable listing  requirements, fees and obligations. Analysts said that given the reservations of Loubser, Nigerian companies wishing to take advantage of these benefits by listing on the JSE may be denied the opportunity.The analysts said that the JSE Limited boss may have been referring to some of the    issues brought out by the last special audit of banks by the Central Bank of Nigeria (CBN) which uncovered insider dealings and huge toxic assets.


However, as part of efforts to address the weak corporate governance in the capital market, the Securities and Exchange Commission (SEC) is currently exposing the report of a special committee   on corporate governance that was set up in 2008. The report was submitted last year and it is being exposed by the Commission to stakeholders for their contributions before its implementation. 



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