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Faulty Moves to Force Telcos to List on NSE

By Ken Nwogbo
16 July 2015   |   11:27 pm
THE federal government appears to be planning a fresh move to coerce major companies in the oil and gas, telecommunications and power sectors of the Nigerian economy to list on the Nigerian Stock Exchange (NSE). The latest initiative to mandate telecommunications services providers to map out 30 per cent of their equities to Nigerians is…

Nigerian-Stock-ExchangeTHE federal government appears to be planning a fresh move to coerce major companies in the oil and gas, telecommunications and power sectors of the Nigerian economy to list on the Nigerian Stock Exchange (NSE).

The latest initiative to mandate telecommunications services providers to map out 30 per cent of their equities to Nigerians is not well thought out.

It has long been resisted by the businesses and segments in Nigeria.

Agreed that further expansion by way of addition of new investors is a benefit to every company, it is however at the discretion of the entrepreneur to choose how to shore up his or her capital.

It therefore makes a lot of sense if entrepreneurs who have risked everything to grow their companies willing decide to add new investors.

Yes, the financial benefit in the form of raising capital is a distinct advantage as the capital funds can be used to fund research and development, fund capital expenditure or even used to pay off existing debt.

But the argument that telecom operators including MTN, Globacom, Zain, Etisalat and Visafone must be willing to redistribute their profits with Nigerian investors by listing at the NSE is most unformed.

Today, major telcos, would prefer to source their funds from aboard rather than list on the NSE where costs are high.

Despite the recent reduction in the initial listing and annual listing fees by the NSE, the exchange still remains the costliest stock exchange in the emerging markets.

Major Exchanges in Africa, namely, Cairo Stock Exchange (CSE), Johannesburg Stock Exchange (JSE), and Nairobi Stock Exchange (NSE), have all introduced compelling incentives to entice upstart firms that might want to access the market following the crippling global financial meltdown.

As the first step to attracting companies, NSE needs to make it easier and cheaper for companies to list on the Exchange.

On the part of the federal government, there should be checks on the present practice where huge amount of money is being transferred out of the nation’s economy.

The government can push for the localisation of telecom content, that way, the money made by the telcos would circulate locally instead of shipping them abroad in the name of sourcing for content.

Importantly, government must find ways making these companies contribute to various corporate social responsibilities.