Operators in the Nigerian capital market are divided over the impact of the stock market so far on the economy.
Speaking on the background of impact of the market on Nigerian economy in the last 53 years, some of them said that the market is not fully supportive of the economy as it is still at infancy stage of development, while some others noted that it has had commendable imapct.
According to Mr. David Adonri, Managing Director/CEO, Lambert Securities & Investment Limited, the Nigeria capital market is not the dominant point in the country’s economy considering the capitalisation of the market.
He noted that the market capitalisation, which presently stands at $72 billion or about N11trillion is less than 20 percent of the country’s Gross National Product, GNP, adding that in other jurisdictions, the size of the capital market could be about 120 percent of their GNP.
“Secondly, looking at the market capitalisation too, that of South Africa is more than $400 billion; Malaysia is more than $600 billion, and looking at the markets at our own level of development like in Brazil, it is in the region of $500-600 billion. Of course, the American market is over $15 trillion. So you can easily see the gaps between us.
“And the market is still not the dominant force in the economy of the country because most requests for funding come from the money
market still. You hear of money market syndicating huge facilities in billions for domestic enterprises, whereas those funds ought to be found in the capital market because those enterprises actually require long term funds.
“But because of the underdevelopment of the capital market, and that the capital market at this stage does have enough capacity to mobilise capital to that massive level, a lot of fund seekers still go to the money market to raise funds. So that is the deficiency of the market, which actually define its infancy at this stage. But there are transformations that are currently being carried out that will take the market out of infancy, perhaps to its adolescence stage.”
Adonri stated that the underdevelopment in the capital market, has, however, engendered reform programme that is being implemented of which the high point is the target to take the market capitalisation to one trillion dollar.
He said, “In the pursuit of this course, we have different programmes and strategies that are been rolled out, some of them are processes that could deepen and nationalise the market.”
Generally, he added that the capital market has progressed reasonably well over time than what it used to be.
On the contrary, Alhaji Ola Yussuff, Managing Director/CEO, Trust Yield Securities Limited, opined that the capital market had made progress over time, and could be said to be a better reflection of the Nigerian economy.
Nonetheless, he said that more could still be done to get companies from those sectors that are not represented to get listed in order to have full representation of the economy.
-Vanguardngr
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