THURSDAY, 15 JULY 2010 01:22 BADEJO ADEMUYIWA
As the Goodluck Jonathan administration tinkers with several options to grow the economy before the close of its tenure, upstream oil majors and telecommunication firms may be compelled to list their shares on the Nigerian Stock Exchange (NSE).
This is one of the measures being considered by the Federal Government to deepen the capital market which all share index as at Tuesday stood at 24,842,01, and market capitalisation at N6.1 trillion, from the trading of 282.2 million shares valued at N1.7 billion.
If the option is eventually adopted, companies like Total, Chevron, Shell, Mobil and Agip in the oil sector will trade their shares on the floor of the stock exchange. Similarly, dominant telecommunication companies, including Globacom, Etisalat, MTN, Zain and other major telecom firms may join Starcomms plc that has since been listed on the exchange.
Osita Ogbu, economic adviser to former President Olusegun Obasanjo, said such policy makes sense as both the companies and Nigeria will benefit a lot in terms of expanded ownership base and access to more funds for their operations.
“For MTN, it makes a lot of sense, as it will bring Nigerians to tap into their huge profit. But actually, I think it is a win-win thing for them and the society because it will help them raise money and expand their ownership base while the investor will tap into their gains,” he said. “It will also diversify the stocks traded in the Exchange and help boost confidence. Although I don’t know if it is right for them to be quoted publicly now, but if there is a public policy that supports that, the provider should welcome the idea.”
The idea, which had been canvassed earlier by private sector and capital market operators, will dominate tomorrow’s meeting between Olusegun Aganga, finance minister, and operators of the financial services sector.All regulatory bodies and operators in insurance, banking, capital market, Nigeria Customs Service, among others, have been invited to the meeting scheduled for tomorrow in Lagos. Issues on the agenda include an evaluation of the 2010 Appropriation Act, to determine if the provisions of the Fiscal Responsibility Act 2007 are being complied with; as well as measures being taken or proposed to restore confidence and effectiveness in the financial sector which has been haunted with crisis of late.
The aspect that will touch the Nigeria Customs Service is the clearance of goods at the ports, and initiative to plug leakages in revenue collection. The Federal Government, under the Customs reform initiative had, in 2008, set 48 hours target for the delivery of imported goods from the ports.The meeting will also deliberate on employment creation and economic growth, as well as a realistic timetable for other key economic reforms, particularly the withdrawal of subsidy on petroleum products.
Each regulator at the meeting is expected to present to Olusegun Aganga, minister of finance, issues and status report of its industry, policies and options for the way forward. The report of the outcome of the meeting, designed to intimate the top administrators of the machinery of government with the new policy direction of the Federal Government, is expected to reach the presidency on, or before Monday next week.Saheed Bashir, head analyst, Meristem Securities Limited, endorsed the proposal to compel blue chip companies to float their shares in the capital market.
“The thing about getting listed in the stock exchange normally has to do with corporate decision. But it is good nonetheless, as it will benefit the generality of Nigerians. Also, we should look at what has happened to other quoted companies like the failed banks, they were not better run, anyway,” he said.