Collaborating to Attract More Investments

NSE DG, Oscar Onyema

Goddy Egene writes about a new partnership between the Ministry of Industry, Trade and Investment and Nigerian Stock Exchange (NSE) that would attract more investments to the economy.

 The stock market is the barometer to measure the performance of every economy. This is so because all sectors of the economy are represented through the various companies listed on the stock exchange. However, the same cannot be said of the Nigerian stock market because the companies in it do not represent the entire sectors of the Nigerian economy.

Some critical sectors such as telecommunications, oil exploration and gas and certain areas of the industrial sector are still not yet captured in the stock market performance indicators. But the management of the Nigerian Stock Exchange (NSE) has stepped up efforts to ensure that substantial sectors of the economy are represented in the market.

 Apart from reviewing its listing rules, the NSE has been engaging operators in the various sectors in order to woo them to list their companies and enjoy numerous benefits.

These efforts have received a boost as the Minister of Industry, Trade and Investment, Mr. Olusegun Aganga, recently assured the management of the NSE of the ministry’s support in ensuring that more investments flow into the Nigerian stock market in particular and economy in general.

 

Aganga, who spoke at NSE CEO sectoral dinner organised for entrepreneurs in the industrial goods sector in Lagos, last month promised a new partnership with the exchange to achieve that objective.

Aganga’s Commitment
However, analysts in the Nigerian capital market community are not surprised at the pledge by the minister given his commitment to ensuring the inflow of investments into the economy.

 Before he was made the minister of finance, Aganga was one of the two persons invited from the diaspora to be members of the special committee set up in 2008 to come up with a reform package that would reposition the capital market and make it more attractive to investors.

Aganga was then saddled with the task of calling up leading global investors and find out why they were not patronising the Nigerian market as expected. His findings and contributions formed part of the special report that is being implemented in the market by regulators now.

 

Besides, Aganga, as minister of finance, was also instrumental to the recruitment of the Chief Executive Officer of the NSE, Mr. Oscar Onyema, in 2011. The coming in of Onyema has led to reforms at the exchange that are contributing to the rebound the stock market is enjoying now. Therefore, the minister’s assurance to support the efforts in attracting more investments into the economy through the NSE was not seen as another empty promise by government officials.

CAC’s Visit to NSE
Apparently matching words with action, one of the parastatals under the ministry of industry, trade and investment, Corporate Affairs Commission (CAC) was at the NSE last week.

 

Chairman of CAC, Chief Funsho Lawal, assured the stockbroking community of the commission’s determination to ensure that adequate information needed to assist investors to make vital decisions would be available through the stock exchange.

 He said one of the principal aims of the commission was to ensure that more companies were registered and quoted on the NSE, hence the need for adequate information to assist investors in making decisions.

“We are happy to collaborate with the NSE and the market community to ensure that activities in the market as regards quoted companies are boosted. To this end, we would try to ensure that companies are properly registered and we plan to help stockbrokers and investors in making adequate decision regarding the companies they are investing in. We will also be involved in assisting companies who plan to gather information on how to list their shares on the exchange, and give them the necessary steps towards easy registration that will ultimately lead to the listing of their shares on the NSE trading floor,” Lawal said.

 

CAC will establish as a contact centre at the NSE as part of the new partnership to provide adequate information on companies to assist investors in decision making.

 For the first time in the history of Nigeria, CAC has achieved a 24-hour registration of businesses in its Abuja and Lagos offices, while arrangements have been concluded to extend it to other states of the federation in no time.

Challenges of Listed Companies
While listed companies through the listing takes care of their financial challenges, there are other factors militating against the operations that have retarded their growth and prevented more flow of investments into the country.

 

The performance of the companies in the industrial goods sector, for instance, have been hampered by poor infrastructure, proliferation of smuggled goods, inconsistent government policies, influx of sub-standard goods and unfavourable import tariff.

 However, Aganga said the ministry was taking measures to ensure that these challenges are tackled. Specifically, he assured the CEOs of listed firms and prospective ones that the ban placed on some foreign products would be implemented.

He added that the ministry would equally ensure implementation of tariff.
The minister noted that the federal government was committed to partnering state governments in creating a sustainable enabling environment for attracting and retaining local and foreign investments across the country.

Creating a Conducive Environment
Aganga declared that the Federal Government was creating the environment that would ensure inflow of more investments.

“We are creating a sustainable enabling environment that is capable of attracting and retaining both domestic and foreign investments. It is against this backdrop that the federal government, created the new federal ministry of industry, trade and investment. Government’s driving force has been the need to meaningfully improve the welfare of the average Nigerian by designing and implementing policies and strategies that will lead to inclusive economic growth,” he said.

 

The minister explained that in order to achieve this, a committee has been set up to develop an integrated industrial policy for Nigeria.

 He said: “This is the first time that we are doing this since 14 years, in terms of developing an integrated industrial plan. But more importantly, we are going to develop institutions that will drive the industrialisation of this country. We are creating a sustainable enabling environment that is capable of attracting and retaining both domestic and foreign investments. It is against this backdrop that the federal government, created the new federal ministry of industry, trade and investment.

 

Government’s driving force has been the need to meaningfully improve the welfare of the average Nigerian by designing and implementing policies and strategies that will lead to inclusive economic growth.

“In order to achieve this, we have already set up a committee to develop an integrated industrial policy for Nigeria. This is the first time that we are doing this since 14 years, in terms of developing an integrated industrial plan. But more importantly, we are going to develop institutions that will drive the industrialisation of this country.”

Positive Results
There is no doubt that several investment climate reform programmes embarked upon by the ministry have started yielding good dividends going by recent reports from reputable international organisations, scoring Nigeria high in terms of inflow of foreign direct investment (FDI) compared with other developed and developing economies across the globe.

 

Nigeria has been ranked as one of the four major investment destinations and growth areas in the world. According to KPMG, one of the world’s foremost audit, financial and tax advisory firms, Nigeria’s newfound status followed the disappointing returns recorded by the Brazil, Russia, India and China (BRIC) with the exception of China.

 

Also, statistics from the United Nations Conference on Trade and Development(UNCTAD), put Nigeria as Africa’s biggest destination for FDI in 2011, with total FDI inflows of $8.92 billion. Specifically, the report stated that Nigeria received $8.92 billion in FDI, thereby placing it as first in Africa, while South Africa was ranked next with total FDI inflows of $5.81 billion.

 

According to the global Chief Economist at Renaissance Capital, Mr. Charles Robertson, Nigeria is currently the best investment destination globally with prospects for high returns on investment.

 

“We know Nigeria is not risk free. But look around the world and find another economy with 160 million people growing at seven per cent with such potential. It's a struggle to find them,” Robertson said.

Similarly, the Standard Bank's Head, African Equity Product, Mr. Matthew Pearson, said despite the infrastructure and security challenges, the opportunities in Nigeria are quite enormous for any discerning investor to ignore. "The demographic dividend is colossal," Pearson said in a recent interview with Reuters.

 

Source: ThisDayLive