How NSE will emerge top five in world exchanges ranking profile
For the Nigerian Stock Exchange (NSE) to become one of the top five exchanges on the World Federation of Exchanges list (WFE), the Federal Government must adopt pragmatic policies that would engender an enabling environment for investments.
Government will also undertake a complete overhaul of the nation’s investment incentive packages, taking into consideration the experiences of other emerging markets.
Indeed, prior to the 2009 global financial downturn, the NSE was rated number two in the globe. Shortly after the meltdown, the exchange was still among the top five stock markets in the global performance index.
The former Director-General of the exchange, Professor Ndi Okereke-Onyiuke had expressed optimism that the NSE would sustain the high performance.
“In spite of this obvious disadvantage, the NSE was still among the top five stock markets in the global performance index. As at today, we are number two in the globe as markets in most developed economies are yet to fully rebound. Our market would sustain this high performance,” she stated
But, a recent assessment on the WFE performance indices showed that NSE is not rated one of the top ten on the list.This is in spite of strategies and strict regulatory framework and reforms introduced to reposition the market for growth and development as well as increased the dividend yields of shares for investors.
The former Chairman of the board of Nestle Nigeria Plc, NSE, Chief Olusegun Osunkeye, in an exclusive interview with The Guardian submitted that for the NSE to rev up its position in the global market, government and regulators should create favourable policies. They should also put in place programmes that would spur activities in the various sectors of the economy, especially the real sector and attract investment.
He pointed out that the real sector plays strategic roles in the growth of any economy, while maintaining that sustainable development can only be articulated if resources are efficiently mobilised and transformed into productive activities that stimulates growth and generate employment.
Osunkeye, who is also the Past Chairman of the Institute of Directors Nigeria (IOD) said: “NSE is aware of that issue and I am aware that there are many things they are putting together. For instance, we want depth and width and NSE is working to see if we can get more companies listed like other African companies in other countries then we should be in the top 10 going forward.
“On what is pushing other countries, investment climate talks a lot about us as a country. So we as a country must be investment friendly and to be investment friendly, we have to do a lot of things as regards policy. The cost of doing business in Nigeria must come down plus the macroeconomic indices.
“When people feel that if they bring in money, they can invest, thrive and make profit, repatriate the profit and everybody is better of particularly when the investment policy is not for only foreign investment but also for local investors. We should start from home. Charity begins at home.”
“We should reduce the cost of doing business. We should reduce bureaucracy. We must increase incentives to entrepreneurs both small medium and large. The small will become medium, the medium will become large and the large will become larger.
Aside incentives, Osunkeye also stressed the need for government to provide the basic infrastructure.“Infrastructure is critical as part of ease of doing, transportation, communication and financing. Taking money inform of loan to finance our business should be easy. The interest rate should not be too high.
“Banks should be able to lend money in a long term basis not short term. We want industries to survive and it is industries that produce food required by the populace.
“We should look into manufacturing sector and what we can do to incentivise them and make it easy for them to get loans, certainty of laws, policies and general incentives.”
The Managing Director of Highcap Securities, Imafidon Adonri explained that the government needed to tackle the macroeconomic concerns impeding the growth of the economy and hampering investment.
“There was a time we were the best performing market in the whole world. In Africa now, we are not even one of the first 10; the market has been down for quite a while, so it is not surprising that we are the best performing in Africa
“You know that our market has not been doing very well in recent times because of the state of the economy, so it is not abnormal for us to be rated low. They have criteria they use to rate performance. The turnover, returns in the market and so on and you know that those rating parameters are very objective. So as the economy challenges and the market fundamental changes and the market recovers, maybe we will become the best in the world again.”
The President, Independence Shareholders Association of Nigeria, Sunny Nwosu, noted that Exchange cannot become competitive without boosting its GDP rate and making data available at any time.
“The most important thing is for you to look at our GDP. The way we relate to the regulators of the world federation of Exchange. If they are asking for a data and it fails to get there at the appropriate time, they will not recognise it.
“Then you look at the management, there are a lot of survey that they take into consideration before they come to such rating, take for instance, the news item that says that our banks are insolvent.
“These are people that will not come to investigate but from the surface, they are doing so many things because they must have asked the data, which did not get to that and on the basis of that, they may just give their judgment and you can imagine the CBN, is like backing them.
“At a time they supposed to tackle these thing, the will not. Again, other countries may, rank higher than us because we do not produce anything even ordinary detergent,” he said.
For the fifth time, the World Economic Forum (WEF) had ranked the Johannesburg Stock Exchange (JSE) as the number one stock exchange globally.The bourse, which operates the largest equities and bond markets in Africa, was deemed a world best for effectiveness of regulation and supervision among the 144 nations examined in the Global Competitive Report (GCR) 2014-2015.Criteria for the ranking included: quality of infrastructure, institutions growth, and efficiency and market sophistication for its judgment.