The Chairman, Association of Stockbroking Houses of Nigeria (ASHON), Mr. Patrick Ezeagu, has listed some challenges militating against capital market operators in Nigeria and how to find lasting solution for them.
Ezeagu advocated more partnership between government and the capital market to ensure a more vibrant market.
Responding to media enquiries on developments in Nigerian capital market, he explained that the growth and development of the market was linked to the nature of the economy.
“The challenges are so numerous. The economy is still fragile, hence, the greatest problem is illiquidity. Once we don’t have liquidity in the market, every other thing takes cue from it. When the Federal Savings Bond started off, we were able to do over two billion, but gradually the promoters are looking for ways of shoring it up.
“Another thing is the issue of capacity of the various operators in the capital market. This has to do with the capital market operators (CMO), stokers, the investors and the public. We need to be abreast of the dynamics of changes in the market.
“The issue of the way and manner the PFA pension fund is being run currently requires some modification for enhanced efficiency and effectiveness as there are certain laws that stipulate the percentage of the fund that can be invested in the capital market and we are saying that this should be increased to deepen the market and strengthen liquidity.
“Another challenge that needs to be addressed in the market is the absence of a deliberate policy from the government to ensure consistency in policy formulation and implementation. The capital market is information-driven, hence, government must demonstrate consistency of policy to sustain investors’ confidence in the market.
“Government is currently borrowing at a very high cost and that borrowing is impacting negatively on people’s investment in the equities market because returns on treasury bill is now more attractive than equities.
“You can lock in like up to 16 per cent in treasury bills. If the economy is growing consistently, you can do more than 16 in equity but it is difficult under the current operating environment. Therefore, government’s treasury bill is making investment in equity less attractive with dire consequences on the activities of capital market operators.