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‘Why government must prioritise capital market issues’

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Piqued by the non-inclusive approach of Nigeria’s economic growth in the past few years, capital market experts at the weekend, stressed the need for government to position the market at the centre of policy formulation in order to achieve a more vibrant and competitive market post-election.

The stakeholders insisted that as the economy has returned to a positive growth path, capital market development in Nigeria should be a key policy issue going forward, to foster savings and investments for inclusive growth

According to them, views of the capital market are necessarily taken into account in policy formulation in government circles, because the market is the aggregation of all the big, strong and reliable corporate players and organisations.

More so, they added that if priority were given to issues concerning the market, it would instil good corporate governance on the Nigerian quoted companies, and ensure more discipline among operators.

Therefore, they suggested that government must mainstream the Nigerian capital market master plan into the country’s Economic Recovery and Growth Plan (ERGP).

For instance, a professor in the Dept of Business Law, College of Law, Igbinedion University, Okada, Nat Ofo, said political governance and corporate governance must converge for a country to make meaningful progress.

“The capital market is not the only consideration because government caters to a lot of interests, and this ordinarily impacts on policy formulation. No economic blueprint would be successful if the input of the capital market, the heartbeat of the economy, is disregarded.”

Professor of Capital Market, Head, Banking & Finance Department, Nasarawa State University, Keffi, Uche Uwaleke, argued that Nigeria’s capital market will be in a stronger position to mobilise funds for both corporate organisations and governments for long term investments if market issues are prioritised.

According to him, at less than 20 per cent of the country’s GDP, the current size of the capital market constrains its role in economic development, even as liquidity as measured by trading volume is comparatively low.

“The issuer base is not diversified, while foreign investors are significant players in the equities market often dictating the pace of market activity which leaves the market vulnerable to external shocks.

“In order to address some of these challenges, government policies can be used to lead more issuers into the capital market. For example, the government can grant tax incentives to firms that are willing to list on the exchange as well as reward already listed companies through patronage and preferential business access.

“Also, for a more inclusive outcome, government’s privatization programmes should be routed through the Stock Exchange. The result will be improvement in infrastructure and enhanced job opportunities,“ he added.

Corroborating, the Publicity Secretary, Independence Shareholders Association, Moses Igbrude, said: “The government should know and understand the importance of the capital market, if government does not know, the regulators should constantly point it out to them.

“The capital market cannot operate in isolation of the economy, when the economy is under-performing, companies will be negatively impacted. Introduction of government policies without consultation with stakeholders is inimical to market growth.”

He added: “These uncoordinated and arbitrary ways of policy formulation is dangerous and injurious to investments in Nigeria, and will scare away investors. Until federal government makes the capital market a focal point, and gives it the priority it deserves, Nigeria’s economy would remain underdeveloped.”


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