Through Chinwendu Obienyi
A The main engine of economic growth and development of any nation is the stock market as it has a positive impact on the economy by providing financial resources through its process of intermediation for the financing of long term projects.
These projects could be promoted by governments or private institutions and, therefore, it shows that capital markets are key elements of a modern market-based economic system as they serve as a channel for the flow of resources from â capital savers to the capital’s âborrowersâ.
An efficient capital market is essential for economic growth and prosperity and being a reliable barometer to measure the economic condition of a country, every major change in the country and the economy is reflected in the prices of stocks listed on the stock exchange. from any country.
The rise or fall in stock prices indicates the cycle of economic boom or bust and it is no longer a news flash that the challenges facing Nigeria are affecting all sectors of its economy, not thanks to the COVID-19 pandemic in 2020. This has prompted analysts to reiterate the need for bold reforms in the oil and gas, power and other sectors to spur growth.
Although the Nigerian stock market had a better exit in 2020 despite the pandemic, the year 2021 did not really keep pace with the previous year due to the exit of foreign investors, from an inflation rate to double digits as well as the currency crisis.
In addition, investors remain cautious as signs of confidence building are lacking, especially since they have not yet recovered from the 2008 stock market crash. However, there is cause for confidence as the Nigerian Exchange Limited (NGX) is on track. to deepen and increase access to financial services for Nigeria through technology while championing infrastructure development and economic growth.
The post-demutualization NGX continued to be the preferred listing destination for companies seeking to raise capital through corporate bonds, stocks and even private companies seeking to raise public capital.
Capital is indeed essential for the growth of companies and the NGX plays an essential role in the process of capital formation by mobilizing long-term savings to finance long-term investors and by helping issuers and investors to reach their goals. So far, the exchange has facilitated the necessary financing of more than 6.71 trillion naira raised by states and companies in various asset classes.
Notable among these transactions is Emzor Pharmaceuticals N13.7 billion 5-year fixed rate senior unsecured bond, listed in April. Also BUA Cement’s first listing of a 115 billion naira bond issue, the largest of many corporate debt issues in the history of the Nigerian capital market (NCM).
It is no wonder that market participants were delighted to hear that MTN Nigeria Communications (MTNN) Plc is taking advantage of this opportunity and has obtained the approval of the Securities and Exchange Commission (SEC) for the offer to sell. up to 575 million shares owned by the MTN group.
This is undoubtedly an exciting time for the MR, as stakeholders cling to the belief that the NGX can live up to its commitment to be an open and dynamic exchange, constantly evolving to meet the needs. of its stakeholders and eagerly awaits many other strategic opportunities playing its own role in reducing the infrastructure deficit which has / is still a topical issue in the economy, poverty, global flows, access to capital and strengthening financial stability.
Speaking at the just concluded inaugural Capital Markets Conference hosted by NGX, Nigeria’s Vice President Prof Yemi Osinbajo praised NGX’s digitization efforts and urged the stock market continue to work with all government and regulatory bodies, such as the Central Bank of Nigeria (CBN), the Securities and Exchange Commission (SEC) and the National Pension Commission (PENCOM) among others to ensure that the risk premium Excessive capital market activity is reduced and foreign investors are strongly reassured about foreign investment mechanisms and other regulations that help them channel their resources and exit them with as few constraints as possible.
âAs a government, we have shown our commitment to the growth of NGX and we want NGX to see itself as a critical player, even in negotiations on Africa-wide initiatives such as the Free Zone. African continental exchange (AFCTA). The macroeconomic environment and regulatory regime provide unprecedented opportunities, as announced by the inaugural capital markets conference, to attract more retail investors, deepen the market and positively impact livelihoods Nigerians, âOsinbajo said.
Also speaking at the event, the President of the country’s Senate, Senator Ahmad Lawan, who was represented by the Chairman of the Senate Capital Market Committee, Senator Ibikunle Amosun, noted that the role of the Capital in an economy cannot be overstated and as a country there needs to be a strong, productive, responsive and politically stable capital market.
“That’s why stakeholders need to collaborate with each other and be concerned with creating our own world-class capital market hub for financing investment projects and harnessing capital wisely.” There is a need for capital market operators (CMOs), public and private sectors to take advantage of the opportunities offered by the capital market to finance equity products that will reorganize our economy, âhe said.