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‘Bureaucrats misled FG over intervention in capital market’

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By Udeme Ekwere and Ifeanyi Onuba

Published: Tuesday, 13 Jan 2009

The Director-General, Nigerian Stock Exchange, Prof Ndi Okereke-Onyuike, has alleged that bureaucrats misled the Federal Government against intervening in the crisis experienced in the capital market.

Onyiuke, who disclosed this on Monday in Lagos, during a review of activities of the NSE for the 2008 year, said that the non-intervention of the government in the crisis was now a major obstacle to the rebound to the prices of equities on the exchange.

She criticised the refusal of the Federal Government to intervene in the capital market crisis, unlike what happened in some developed market, stressing that it was a major cause of the falling stock prices.

According to her, “Government’s pronouncement that it would not bail the market, even before stakeholders concluded their meeting on the way forward showed that it did not appreciate the problem in the capital market.”

She added, “Nigerians are parochial in their approach to national issues, especially on the true situation in the Nigerian capital market. It is our usual approach that once we are not in charge we make every effort to pull down people for selfish reasons.”

She said that members of the organised private sector were still collaborating to find sustainable financial bail-out plans for the market.

The DG, however, said that the NSE had not shut its doors to any assistance from the government in the bid to restore investors’ confidence to the market.

She pointed out that despite the effect of the global financial crisis; the NSE recorded a turnover growth of 39.85 per cent and 14.3 per cent in volume and value terms respectively in 2008.

While admitting that five banks had accepted to play the role of “liquidity providers” in the market, she, however, declined to provide details on the “liquidity providers.”

She added that the NSE had started dialogue with the Ministry of Finance on issues affecting the financial industry, especially the capital market.

On why the appointed market makers had not begun operations, the DG said they were only appointed by the Securities and Exchange Commission but yet to be licensed by the NSE.

She pointed out that all companies desirous of becoming market makers must demonstrate to the NSE that they were proficient in capital market activities and must provide evidence of a liquidity provider.

She added that without the liquidity provider, such companies would not be licensed as market makers.

She said that the share buy policy and the appointment of market makers would have been the immediate solution to the market crisis.

She, however, urged the National Assembly to expedite action on all bills on tax, oil and gas reforms, privatisation and capital market reforms, all of which would ensure speedy development of the capital market.

On the future outlook for the capital market, the DG explained that based on objective assessment of the capital market and in line with cyclical patterns of stock markets globally, the Nigerian capital market would rebound soon.

According to her, “Over time, we have brought to the fore the challenges militating against stock market development in the country. We are optimistic that the Nigerian market will rebound in the not too distant future considering the most recent resurgence of the bulls.”

She pointed out that the fundamentals of companies listed on the exchange were still strong adding that statistics available to the NSE showed that a lot of foreign investors were coming back to invest in the capital market.

She said that the primary market promises to be busy during 2009 considering the number of companies that have obtained approval of the Council in 2008 but were yet to make the issue available in the market.