Why Companies Should Patronize Nigeria's Capital Market

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Wednesday, September 08, 2021 / 6:47 PM / Ottoabasi Abasiekong for WebTV / Header Image Credit: WebTV

 

Investors support and show huge interest in long-term financing that is geared towards specific projects that cover areas like electricity, housing and infrastructure amongst others. The statement was made by the President of the Chartered Institute of Stockbrokers Mr. Olatunde Amolegbe, FCIS, in a conversation on "Assessing the FGN Partnership with Stockbrokers to Deepen the Capital Market". 

 

According to him Nigeria is facing a challenge of infrastructure shortage which can be  best supported through long-term financing. He said in the past states and even local governments used to access the capital market to mobilize capital for critical socio-economic projects.


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At the turn of the millennium there was a shift to a quicker way of raising funds through the money market, but for longer-term projects the capital market was more suitable, he  noted.

 

Amolegbe urged the governments at different levels to give priority to financing projects through the capital, which he saw as more sustainable while citing the instance of the popular Sura market in Lagos that the Lagos Island Local Government built through capital market funding.

 

Considering that Nigeria has a housing deficit estimated at 17 million units, Amolegbe  urged  the States and Local Governments to explore the capital market to raise funds to finance housing projects. He added that the capital market offers transparency, which builds investor confidence.

 

Speaking on the prospects for pension fund investments, he said present guidelines were concerned with safety, according to him the market regulator was striving to find  a balance between risk and returns.

 

The CIS President also noted that the pension funds has been tiered  in a way that retirement savings account (RSA)  holders, that were relatively young could explore riskier assets to improve investment returns.

 

Expressing his views on the way in which policies and regulations can incentivize greater market business, he cited the example of the Bank of Industry (BOI) whose Managing Director, Mr. Kayode Pitan at a recent investiture, said the BOI had approved concessional lending rates to companies listed on local equity exchanges.

 

Amolegbe stressed the need for growth companies in Nigeria to use the capital market for financing. He called on the Bureau of Public Enterprise (BPE) to insert clauses for the privatization of companies, that would ensure that they list on a local exchange after a certain period.

 

He gave the examples of the National Aviation Holding Company (NAHCO) and the Sky Aviation Handling Company Limited (SAHCOL) as corporations that have been privatized and listed on a local stock market.

 

On the CIS "Honour Roll" he said it was an opportunity to appreciate all the prominent individuals, institutions and corporations that contributed to the completion of its secretariat building in Lagos.


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