June 13, 2017/NSE
His Excellency, Prof. Yemi Osinbajo, SAN, GCON, Acting President of the Federal Republic of Nigeria
The Senate President, Dr. Bukola Saraki; CON
The Speaker of the House of Representatives, Rt Honourable Yakubu Dogara
Your Excellencies, State Governors Present
Distinguished Senators and Members of the Honourable House of Representatives present
H.E. Dr. Kayode Fayemi, CON Honorable Minister of Mines and Steel Development, Chief Host
President of the ECOWAS Commission
Distinguished Ministers and Heads of Agencies
Distinguished High CommissionersPresent
Distinguished Speakers and Panelists
Good morning distinguished Ladies and Gentlemen;
(All protocols duly observed).
It is my immense pleasure to be here today to deliver this goodwill message at the maiden edition of the National Mining Summit & ConMin West Africa,and it is with a great sense of enthusiasm that I address you today in anticipation of the far reaching positive effect the outcome of this conference will have on the economy at large and specifically on the Nigerian capital market. I would like to thank the Ministry of Mines and Steel Development and the organizers for bringing together prominent figures from Africa’s mining and infrastructure sector to work towards advancing mining in Nigeria and across West Africa.
In August of 2016, the National Bureau of Statistics (NBS) announced that Q2 Gross Domestic Product (GDP) declined by -2.06%, signaling a recession. GDP further contracted by -2.24% (year-on-year) in real terms in the third quarter, exacerbated by the steep decline in oil and gas production due to sabotage of oil export facilities; low commodity prices; acts of vandalism and insecurity across the country.
However according to the NBS, growth in the non-oil sector of the economy returned to positive territory in Q3, largely due to improved performance of Agriculture and Mining sectors – the two frontiers of this administration’s transformational agenda for economic recovery, revenue diversification; job creation and economic empowerment for Nigerians.
The Nigerian economy is at a critical juncture of its economic recovery from the worst economic recession in recent times. It is our humble expectation, that the National Mining Summit will provide the framework for a sustainable and enabling environment for the continued growth and development of the Mining sector and the diversification of the Nigerian economy in general.
For the Nigerian mining sector,current statistics present an immense opportunity for growth. Today the sector accounts for 0.02% of exports,0.3% of national employment and contributes 0.5% an estimated $2.0 billion to the nation’s GDP. This representation pales in comparison to global trends for the sector. In
2015, the South African mining industry contributed $19.6billion towards the country’s GDP representing 7.1% of overall GDP. The Canadian mining sector contributed $56.0 billion (3.4%)to GDP and accounted for 19% of its export value in the same year. The Australian mining sector on the other hand contributed 6.9% ($114.9 billion) to GDP in 2016.
Globally, the Metals and Mining sector is among the largest industry sectors by the number of companies in operation and its employment size. The sector has always been reliant on the capital markets to provide funding for the exploration and development of high and low risk mineral projects. Between 2005 and 2014, Metals and Mining companies on Australia’s Securities Exchange raised approximately $69.1billion in IPOs and secondary market issuances. Similarly, the Toronto stock exchange recorded $2.6billion in equity capital raise and 505 project financing YTD.
According to the 2017 MSCI World Metals and Mining Index, the market capitalization of large and mid-cap stocks across twenty three (23) ‘Developed Markets’ now stands at approximately $500.97 billion. The index annual performance grew by 56.29% in 2016 from a 2015 decline of 39.43%, outperforming the MSCI world index which rebounded from a 0.87% decline in 2015 to a modest 7.51% growth in 2016. This trend was also witnessed in our domestic market where the New Gold (a commodity backed ETF tracking the price of South African gold) outperformed the NSE ASI, recording a YTD performance of 50.37% and a 4 Year return of 185.64%, in comparison to the NSE ASI which recorded a YTD performance of 23.75% and a 4 Year return of 15.57%.
The role of the capital market in harnessing the Nigerian Mining sector’s potential and providing entrepreneurs with access to large, affordable funding for capital intensive projects cannot be overemphasized. Investors typically look to the capital market for credible issuers for wealth creation; while the issuers leverage the capital market to attract global investments, resulting in enhanced corporate governance and a diverse pool of investors.
The Nigerian Stock Exchange is well-positioned as a premiere listing destination for African corporates, governments and international issuers looking to access the capital market of the largest economy in Africa. With a total market capitalization of N19.1Tr ($62.6Bn) as at June 9th 2017 across all asset classes, The Exchange provides a platform to raise both equity and fixed income capital for project financing and business expansion. There are currently 175 listed companieson the exchange representing diverse sectors of the economy, and the market capitalization of the natural resources sector, which includes one metal and one mining company amongst others, is a little over N5b. On the Fixed Income side, we have a total bond market capitalization of N7.54Tr ($24.6) of which N563.6Bn ($1.85Bn) was issued amongst 18 State Governments for Infrastructure and project funding.
I hereby encourage the Federal and State Governments as well as the mining industry here present to look seriously at leveraging the opportunities that abound in the Nigerian capital market.The Exchange also looks forward to working closely with the Ministry of Mines and Steel Development towards achieving its mandate of establishing a $600m investment fund for the sector.
Once again, I take this opportunity to commend the Honorable Minister and the Ministry of Mines and Steel Development for this laudable initiative and I look forward to learning of the varied insights and initiatives that will be generated during the course of this symposium.
Thank you.
