The Capital Market Crisis: An Investor’s Concern



By Dr. Reuben Abati


The word “investor” in the title of this piece is used advisedly: it simply means that I am one of the millions of ordinary people who bought a few company shares, and so by that fact became an investor in the Nigerian capital market which is now under a terrible siege. The Chief Executive Officer (CEO) of the Nigerian Stock Exchange (NSE), the President and the Council members have all been sacked by the Securities and Exchange Commission (SEC), and a sole administrator has been appointed to take charge of the Exchange to prevent a likely collapse of the market, following conflicts among the NSE elite and allegations of insider abuse. But in all of this, there has been very little focus on the ordinary investor, this has so far been the fight of the big men and women, but the worst victims are bound to be those ordinary investors who for the second time in less than three years are being told that the market in which many of them have invested their fortunes is failing. Many of us were attracted to the capital market a few years ago when it suddenly became the place where prosperity could be accessed.


There was such a big boom in the market which attracted a lot of ordinary people: even students and artisans became stock market gurus, monitoring prices, the stock market pages of newspapers witnestion must serve as the main guide: where is the market headed? Where is it going? Nobody is addressing this. The removal of Ndidi Okereke-Onyiuke may have established SEC as the final authority in the market and that may make some people happy, but we need to raise the discussion beyond the level of individuals. The market does not run in isolation of the larger economy. It reflects the character of the economy; it does not quite determine it. Is it Okereke-Onyiuke’s exit that will reflate the market? What has been proven since 2000 is that the Nigerian Securities market is a market where anything goes, where anything can happen like the country itself. The time is ripe for change in that market, a seismic change; Okereke-Onyiuke’s exit must provide an opportunity for reform.  


My layman’s suggestion is that there should be a radical change in the way the securities market is organized. Old practices need to be transformed. Remedial steps need to be taken in order to save the image of the NSE, the SEC and the country itself, to prevent sending the wrong signals to genuine investors and to restore confidence in the larger Nigerian economy. The security men who have taken over the floors of the Stock Exchange should be withdrawn! The market as it is, is not competitive enough, it is dominated by speculators and buccaneers, with the big investors using it to serve their own interests, cheating ordinary investors in the process. It is competition that will drive change. It should be encouraged. The Nigerian National Assembly also now wants to play a role in the matter, it has summoned the NSE and the SEC, but its members must begin by trying to understand what this is all about and not see it as an opportunity for collecting additional sitting allowances.


Current players in the market: stockbrokers, investment advisers and financial analysts also need to invest in expertise and technology and not see the market strictly as a meal ticket. In the final analysis, the Securities and Exchange Commission must get its acts together. It must embark on a house-cleaning exercise. It is only when SEC gets its acts together that the market can improve. There are many complaints before SEC which have not been addressed- the point is that change in leadership is not enough, emergent issues about the inadequacy of SEC procedures, operations, and capabilities must be resolved. Why, for the benefit of the deaf, is reform so urgent and imperative? The answer is simple. The Nigerian Securities market has already lost over N110 billion worth of investments on account of the events of the last week alone! It could be worse. And it is ordinary investors, mostly ignorant about the dynamics of the market, but who collectively represent the market majority that are being cheated and punished. The injustice that they suffer should not be sustained. What are the signposts that the ordinary investor needs to see to be sure that the market is back? In the long term, the market will start recovering when investors can trade without the help of thieving brokers and they can exercise free control over their investments.



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Source: Proshare



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