Finance
Absence of ‘big listings’ takes local buyers off stock market
LAGOS-The inability of the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) to push for ‘big listings’ particularly by large companies, is adjudged as a major factor driving local equity buyers reluctance at the bourse.
While foreign investors continue to take the shine off local investors at the Nigerian stock market, the inability of the latter to raise their game has continued to be a source of concern to market operators whose major clientele fall within that category.
“There is no business in the stock market because local investors are out of the market. We need to look at the causes,” Ariyo Olushekun, immediate past president, Chartered Institute of Stockbrokers (CIS) said at a workshop organised recently by the Association of Stockbroking Houses of Nigeria (ASHON) and Association of Issuing Houses of Nigeria (AIHN).
“We say the top ten stockbroking firms controlling the market are doing well, I am not sure they are doing well because there are no ‘big listings’. Our local economy is not helping the market,” Olushekun, who is also the vice-chairman/CEO, Capital Assets Limited, further said.
Analysts say their listing on the Stock Exchange would have given more Nigerians the opportunity to be part owners, as well as helped drive liquidity in the market.
Since the capital market witnessed a downturn in 2008 the companies have not seen the need to make bold moves into the market, for fear that such issues might fail, as a result of low investor confidence in the market.
Analysts say regulators should step up their interface with the federal and legislative governments, to push for mandatory listing of companies that currently drive Nigeria’s GDP numbers. Their concerns heightened post-rebased GDP, as the stock exchange ideally should be the barometer for measuring the economy.
The ratio of Nigeria’s capital market to GDP is below 20%; compared with those of its peers like South Africa and Malaysia, which are high at 184percent and 274 percent respectively. Nigeria’s dismal ratio of capital market to GDP results as key drivers of the Nigerian economy hardly feature on the stock exchange.
The current N13.5trillion market capitalisation of equities listed on the Nigerian bourse is just 8.43% of about N160trillion ($1trillion) which Oscar Onyema, CEO, Nigerian Stock Exchange set as target for 2016.
With just two years ahead of this huge target, the outlook is now blurred on the possibility of meeting the mark, particularly as most of the telcos, and oil and gas companies making huge profits doing business in Nigeria are not listing on the stock exchange.
Recently, Oscar Onyema, Chief Executive Officer (CEO), Nigerian Stock exchange (NSE) said that to attract more companies to the exchange and to retain a larger pool of investors at the minimum, the nation’s bourse needs to maintain stable and consistent policy regimes.
Onyema said this at the Capital Market Solicitors Association (CMSA) annual business luncheon, held last week in Lagos.
“We have worked tirelessly to revise key rules for dealing members and issuers, and developed several new rules to create the much needed order, equitable treatment, efficiency and protection for all participants in our market”, Onyema further said.
“Many energy companies will seek equity funding to moderate debt that asset buyers have on their balance sheets”, Austin Avuru, CEO Seplat plc, said at the business luncheon.
“In the past five years, $15 billion in asset acquisition deals have occurred in Nigeria’s oil and gas and power sector, and 80 percent of them were done by debt”, said Avuru, whose Seplat, was the first major Nigerian energy company to have a dual listing in Lagos and London.
Since Seplat listing on the Exchange, its IPO helped to show the way, with $230 million or 48 percent of total funds raised coming from Nigeria.
According to data obtained from the keynote address of Oscar Onyema, the CEO of NSE, titled “Reawakening the capital market through participation of key players in the economy” as at February 2012, agriculture contributed nearly 44 percent to GDP, yet was less than 0.3 percent of market capitalisation; Oil and Gas was over 14 percent of GDP but constituted a mere 3 percent of market capitalisation; Power, at just over 3 percent of GDP, is not represented on the market at all; while telecoms, with 5.5 percent of GDP was a meagre 0.5 percent of market capitalisation.
Arunma Oteh, director-general of SEC, said that the NSE would target 500 companies for initial public offerings (IPO) over the next five years, to reach a $1 trillion market capitalisation by 2016.
She also pointed out that the bourse needs oil and gas, power and telecommunications companies to list stocks to meet its market-value objective.
“There are a number of large, significant companies that are preparing to come to the market,” and talks are being held with telecoms companies on encouraging them to trade their shares, she added.
Business
Nigeria pays US$4.9 billion on petrol subsidy in 2024- NNPCL
It was however noted by Biztellers.com.ng, that although subsidy is back in effect, the main reason for that is the increasingly weak state of the Naira and the country’s extreme dependence on products importation. Also unlike the previous subsidy era, where several oil marketers were getting free subsidy refunds for unverified product importation, this subsidy era is witnessing only one importer, the NNPCL, which in effect is the sole receiver of government subsidies.
Yemie ADEOYE
INSPITE of the official position of the Nigerian government that the controversial petrol subsidy is gone for good as announced by the President on assumption of office, the state owned Nigerian National Petroleum Corporation Limited, NNPCL has disclosed that petrol subsidy is still fully operational in Nigeria, although, under a different identity.
Umar Ajiya, Chief Financial Officer at the NNPCL, disclosed that it cost the company a staggering N7.8 trillion (US$4.9) to cover this price gap in the first seven months of 2024.
Rather than simply referring to these claims as subsidies, he stated that the company is merely managing the price difference in petrol imports on behalf of the federation, stressing that this should not be misconstrued as a return to subsidy payments.
This revelation has reignited discussions on whether the NNPC is indirectly offering subsidies, a concept typically defined as selling a product below its cost price.
Documents reviewed by Biztellers.com.ng showed that the term “subsidy” was used extensively in official correspondence between the NNPCL and the presidency, particularly in reference to the “shortfall.”
Recall that President Bola Tinubu reportedly approved NNPC’s request to utilize the 2023 final dividends due to the federation to offset these costs.
However, during a media briefing on Monday about the company’s 2023 audited financial statements, Ajiya refuted claims that the NNPC is involved in any subsidy scheme.
Ajiya further disclosed that the Nigerian government owes the NNPC N7.8 trillion ($4.9 billion) in subsidy-related debts for the period from January to July 2024.
In furtherance of his clarification to the News Agency of Nigeria (NAN), Ajiya insisted that no subsidy payments have been made to any marketer in the last nine years, citing the NNPC’s role as the sole importer of petrol under supply contracts.
He said, “In the last eight to nine years, NNPC Ltd. has not paid anyone a dime as a subsidy; no kobo has been disbursed by NNPC Ltd. in the name of subsidy. No marketer has received any payment from us for subsidy.”
“What has been happening is that we have been importing PMS, which has been landing at a specific cost price, and the government tells us to sell it at half price. So the difference between the landing price and that half price is a shortfall.
“And the deal is between the Federation and NNPC Ltd., to reconcile, sometimes they give us money, so there is no money exchanging hands with any marketer in the name of subsidy.”
Ajiya remained silent on how much of the $4.9 billion could have been remitted to the federation account if the NNPC had not been covering the “shortfall.”
It was however noted by Biztellers.com.ng, that although subsidy is back in effect, the main reason for that is the increasingly weak state of the Naira and the country’s extreme dependence on products importation. Also unlike the previous subsidy era, where several oil marketers were getting free subsidy refunds for unverified product importation, this subsidy era is witnessing only one importer, the NNPCL, which in effect is the sole receiver of government subsidies.
The Central Bank of Nigeria (CBN) has refuted claims of devaluing the.
Earlier reports suggested that the CBN had devalued the Naira, lowering its exchange rate from N631 to the dollar, compared to the previous day’s rate of N461.60 at the Importers and Exporters (I&E) window.
However, the Central Bank of Nigeria (CBN) released a statement on Thursday through its Acting Head of Corporate Communications, Dr. Isa Abdulmumin, categorizing the report as false information.
In the statement titled ‘CBN Has Not Devalued The Naira’, he said the attention of the apex bank was drawn to the news report by an Abuja based newspaper edition of June 1, 2023, titled “CB Devalues Naira To 630/51”.
However, the CBN stated categorically that the news report was replete with outright FALSEHOODS and destabilizing innuendos, ‘reflecting potentially willful ignorance of the said medium as to the workings of the Nigerian Foreign Exchange Market.’
“For the avoidance of doubt, the exchange rate at the Investors’ & Exporters (I&E) window traded this morning (June 1, 2023) at N465/USS1 and has been stable around this rate for a while.
“The public is hereby advised to ignore the news report by Daily Trust in its entirety, as it is speculative and calculated at causing panic in the market,” the CBN spokesman added.
He, therefore, advised media practitioners to verify their facts from the Central Bank of Nigeria before publishing in order not to misinform the public.
The interest rate in Nigeria has been raised to 18.5 percent, up by 0.5 percent, from 18 percent where it was pegged in March 2023.
The Central Banks of Nigeria’s (CBN) Monetary Policy Committee (MPC) resolved to this effect at its third meeting of 2023 in Abuja, on Wednesday.
Governor, CBN, Godwin Emefiele, made the disclosure in the communiqué of the MPC’s meeting, thereafter.
While engaging the media at the end of the two-day meeting, Emefiele, said the committee voted to keep the asymmetric corridor at +100 and -700 basis points around the MPR.
In the view of the MPC, rising inflation rate is traceable to the high energy cost and challenges around the supply chain, among others, which lie outside the corridors of the CBN.
Emefiele said, “The current trend in price development would continue to be monitored by the bank with greater collaboration with fiscal authority to address the drivers of inflation.”
Biztellers reports that the CBN had effected six consecutive interest rate increases, which has seen the rate move from 11.5 percent in March 2022 to 18.5 percent in May 2023.
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