Business
NSE’s Bold Step in the Right Direction
LAGOS – Eromosele Abiodun writes that the bid by the Nigerian Stock Exchange (NSE) to move from frontier market to emerging market status is a bold step that will determine the future of the capital market
During a news briefing on the 2013 market recap and outlook for 2014 in Lagos recently, the Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, announced that the Exchange will in the course of the year pursue key initiatives aimed at propelling the NSE into the emerging markets.
He said he expect Nigeria to be a key beneficiary of the MSCI 2013 annual market classification review, which will see Qatar and UAE’s (together accounting for 30 per cent) transition from the MSCI Frontier Markets Index to the MSCI Emerging Markets Index.
“Cautiously, we will watch for the effects as Nigeria’s weight in the MSCI Frontier Markets Index shifts from the current 13.8 per cent to 19.7 per cent, making it the second largest market in the index, ”he said.
In growing the capital market in preparation for achieving emerging market status, Onyema said the NSE would in 2014 facilitate access to and participation in the market, increase its footprint on the continent, and deploy a risk framework to safe-guard the market value.
Specifically, he said the NSE plans to increase the number of new listings across five asset classes, operate a fair and orderly market, based on just and equitable principles, and diversify income streams, among other things.
Achieving that, according to him, will involve introducing new products such as a premium board, adoption of Generation ‘Y’ trading tools, and introducing a world-class surveillance programme, among others.
The NSE also plans to champion the development of enabling laws and policies to drive capital market development in 2014.
NSE Indices Formulation
The effort to make NSE a global market actually started a long time ago when the first market index in Nigeria was formulated 24 years after the founding of the NSE. Called the NSE All-Share Index or ASI, it was formulated in January 1984 with a base value of 100. Only ordinary shares are included in the computation of the index.
The index is value-relative and is computed daily. Over thirty years after the introduction of the ASI, the Exchange introduced the NSE-30 Index, which is a sample-based capitalisation-weighted index plus four sectoral indices to complement existing indices. These are NSE-Food/Beverages Index, (Later renamed NSE–Consumer Goods Index) NSE Banking Index, NSE Insurance Index and NSE Oil/Gas Index.
Recently, the NSE introduced the NSE Industrial Index as part of key initiatives to drive market optimisation. The Industrial Goods sector, which has about 100 prospects in pipeline that may possibly list on the bourse, consists of four sub-sectors with 27 companies listed in the sector, which contributes to 28 per cent of total market capitalisation.
The sector has not been able to contribute its quota effectively to the Nation’s GDP due to some key issues affecting the sector e.g. poor infrastructures, influx of sub-standard and proliferations of smuggled goods, unfavourable import tariffs along with inconsistent government policies. According to the key players in the sector, all these have hindered the desired growth in the industrial sector.
A New Level
To further enhance the NSE’s chance and drive the market towards achieving its $1 trillion capitalisation plan, the NSE last year introduced a new NSE Industrial Index made of 10 companies selected from a total of 27 companies listed in the sector.
The selection was based on market capitalisation, liquidity, full year returns of 40.36 per cent in 2012 and year-to-date (YTD) returns of 41.18 per cent when it was launched 2013.
The foundation member of the index are Ashaka Cement Plc, Nigerian Bag Manufacturing Company Plc, Dangote Cement Plc, Lafarge Cement WAPCO Nigeria Plc, CAP Plc, Cement Company of Northern Nigeria Plc, Berger Paints Plc, Cutix Plc, DN Meyer Plc and Portland Paints & Products Nigeria Plc.
Experts had told THISDAY at the introduction of the NSE Industrial Index that it was timely because the existing market indicator, the NSE-30, is more or less a price-weighted average, which gives higher-priced stocks more influence over the average than their lower-priced counterparts, but takes no account of the relative industry size or market capitalisation of the components.
Effort Already yielding Results
The introduction of the NSE Industrial Index also compliments the NSE’s listing drive. Over 100 industrial goods firms were said the be making plans to List on NSE following the introduction.
Onyema had while speaking at a sectoral dinner for industrial goods in Lagos recently revealed that the number of companies listed in the industrial goods sector of the NSE is set to rise as over 100 companies were eyeing listing on the exchange.
There are 27 companies that are currently listed in the industrial goods sector covering building materials, electronic and electrical products, packaging/containers, tools and machinery. The sector contributes 28 per cent to the total market capitalisation of the exchange.
The NSE executive officer, had told THISDAY at the dinner that the situation would improve soon because the Exchange was putting policies in place that will turn the sector around.
According to him, the exchange has made deliberate efforts to encourage new listings. He noted that those efforts are beginning to yield the desired results. Those efforts, he explained, were in the areas of business development, strong regulatory environment and technology.
“We have introduced value adding services, reviewed our listing requirements. The exchange has also introduced x-compliance report for companies and dealing members among other initiatives. All these are attracting attention of companies that have shown willingness to list on the exchange,” he said.
As part of efforts to make the industrial goods sector of the exchange more attractive for investors thereby encourage more listings, the NSE last week introduced the NSE Industrial Index.
The index, which comprises the most capitalised and liquid companies in the industrial sector, is designed to provide an investible benchmark to capture the performance of the industrial sector.
Onyema had explained that 10 out of the 27 companies listed in the industrial goods sector of the NSE were selected for the index based on their market capitalisation and liquidity.
He disclosed that any investor who had invested in industrial goods sector would have recorded a return of 40.4 per cent in 2012, noting that year-to-date, the sector has fetched a return of about 41 per cent.
Apart from the introduction of the index, the NSE will also re-launch its Alternative Securities Market (ASeM) in order to improve the performance of existing firms and encourage the listing of new ones.
Alternative Securities Market
As part of its expansion effort, the NSE had in June last year launched the Alternative Securities Market (ASeM), a market for emerging companies with high potential for growth in Nigeria.
The ASeM, is a specialised board on the Nigerian bourse where small to medium companies can access the capital market under less stringent rules and requirements to raise long term, low cost capital.
Onyema had told THISDAY at the launch that the NSE is a staunch believer in the critical role of emerging enterprises in a developing economy and as such we have taken the bold move of providing a platform for sustainable growth and development of these companies.”
The ASeM board, he said, will allow issuers, especially indigenous companies the opportunity to inject relatively low cost and long term capital into their businesses through flexible rules that recognize their growth potential rather than the size of operation.
Shedding light on the possibility of most of the companies expected on the ASeM board being without any professional guidance and therefore being unable to meet the post listing requirements of the Exchange, GM Listings Sales and Retention, of the NSE, Mrs. Taba Peterside, said: “Designated Advisers (DA) will be required for all companies listed on the ASeM Board of The Exchange to ensure compliance with all the requirements and obligations of the Alternative Securities Market.
The DAs, she added, will provide professional resources to qualifying companies for guidance and advice on securities-related matters.
Information gathered from within the Exchange revealed that the NSE has already completed the selection process for the DAs and is soon to name the successful applicants ahead of the official launch of the ASeM Board slated for later this month.
– THIS DAY
The Nigerian authorities have been called upon to focus on strengthening domestic refining capacity.
The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) made the call in a communiqué issued at the end of the three-day PENGASSAN Energy and Labour Summit (PEALS 2026).
It stressed the need for adequate protection for refineries operating in the country.
The PENGASSAN said Nigeria must reduce the economic inefficiency of exporting crude oil while importing significant volumes of refined petroleum products by creating an environment that supports domestic refining and other value‑adding activities.
The communiqué, signed by the union President, Festus Osifo, and General Secretary, Jerry Amah, stressed the need to protect refineries, including Dangote Refinery and Waltersmith Refinery.
The association said the expansion would enable Nigeria to retain a greater share of the value generated from its petroleum resources while creating jobs, conserving foreign exchange and stimulating industrial development. PENGASSAN linked the growth to wider opportunities in petrochemicals, gas processing and other downstream activities.
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The communiqué reads in part: “The summit called for sustained policies and investments to expand Nigeria’s domestic refining capacity and reduce the economic inefficiency of exporting crude oil while importing significant volumes of refined petroleum products. The need to protect refineries (such as Dangote Refinery, Waltersmith Refinery, etc.) within Nigeria’s jurisdiction was emphasised.
“Nigeria must progressively retain more value from its petroleum resources through domestic refining, petrochemicals, gas processing and other value‑adding activities capable of generating employment, conserving foreign exchange and stimulating industrial growth.
“Ultimately, the strength of Nigeria’s oil and gas industry will not be measured merely by the resources beneath the ground, but by the projects delivered, the value created, the Nigerian capabilities developed, the decent jobs sustained and the prosperity generated for the Nigerian people.”
The association also warned that abrupt policy changes, overlapping mandates, repetitive approvals and conflicting directives increase the cost of doing business and weaken Nigeria’s competitiveness for global energy capital.
The PENGASSAN called for faster regulatory approvals, digitalised processes and clearer timelines, arguing that the effectiveness of regulation should be measured by its impact on investment, production, government revenue, job creation and national value rather than simply by the number of licences or approvals issued.
On gas, the PENGASSAN advocated an integrated approach to developing Nigeria’s more than 215 trillion cubic feet of proven reserves, including investments in processing facilities, pipelines, storage, LNG, LPG and CNG infrastructure. It said gas should be deployed more aggressively for power generation, manufacturing, transportation, fertiliser and petrochemical production.
The association also urged stronger protection of workers’ rights, occupational safety and employment during mergers, acquisitions, divestments and asset transfers, saying sustainable investment requires skilled and fairly treated workers and that increased production must not come at the expense of workers’ lives and wellbeing.
In addition, the PENGASSAN said the next phase of Nigeria’s petroleum industry must focus on execution with measurable targets and clearly assigned responsibilities to ensure policies translate into projects, production, investment and sustainable employment.
Two key stakeholders in Nigeria’s oil and gas industry have resolved to work closed to unlock three million barrels per day (bpd) of crude oil by 2030.
The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), according to the new President of former, Comrade Bosun Olabiyi-Agoro, would be working closely with each other to attain the objective.
He made the disclosure on Wednesday while on a visit to the NUPRC corporate headquarters.
The Head, Media and Corporate Communications, NUPRC, Eniola Akinkuotu, who made the disclosure in a statement, also credited the PENGASSAN President with declaring that inasmuch as the union is open to negotiations, issues bordering on the rights of workers to freely associate and join the union are non-negotiable.
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He made it public that issues surrounding contract staffing will be one of the key issues his administration will address.
“The President of Nigeria has an ambition which he runs through the CCE which is to make sure that by 2030 we are able to produce three million barrels per day. All of us have to work to make that happen. It will be our happiness to make sure that that target is actually attained. We can assure you that we are here to collaborate. We will be very reasonable,” Olabiyi-Agoro assured.
On her part, the Commission Chief Executive, Oritsemeyiwa Eyesan, said the President Bola Tinubu-led Federal Government had been working assiduously to increase production as evidenced by the latest executive order which is targeted at deep offshore investments. She noted that production had risen from a low of 1.1mmbopd a few years ago to an estimated 1.755mmbopd in 2026.
Seeking the support of PENGASSAN to achieve this target, Eyesan, said industrial stability remained critical to hitting higher production targets.
“As you settle into your new role, be assured that the commission will give you 150 per cent cooperation. In addition to the support we will give you, we want to ask that we work very closely to actualise government objectives.
“We want to grow production from our current level to 3 million barrels in 2030. For gas, we are still doing under 8bcf and we want to grow that to 12bcf by 2030. So, let’s make that happen,” she stated.
As the multi-billion-dollar Nigeria LNG Limited (NLNG) Train 7 Project reaches more than 90 percent completion, President Bola Tinubu has described it as critical to Nigeria’s gas-led economic agenda.
According to Tinubu, the successful delivery of the project would help expand Nigeria’s gas exports, create jobs, deepen local capacity and strengthen investor confidence in the country’s oil and gas sector.
The President spoke at the State House, Abuja, on Thursday when he received an NLNG delegation led by its Managing Director and Chief Executive Officer, Adeleye Falade.
The delegation briefed the President on the progress of Train 7, prospects for further expansion and challenges affecting the company’s operations and contributions to the national economy.
The discussions also covered the pricing and accessibility of liquefied petroleum gas (LPG), trucking along the Bonny-Bodo Road corridor, NLNG’s contribution to public revenue, its investments in the Bonny-Bodo Road and other social-impact projects, and the need for a more enabling business environment.
Tinubu congratulated Falade on his appointment, describing his assumption of office as coming at a defining period for the NLNG and Nigeria’s gas development ambitions.
Tinubu expressed the view that the completion of the Train 7 project must translate the country’s vast gas reserves into jobs, increased exports, industrial growth and long-term economic value.
“I congratulate you, Leye, on your appointment. Train 7 is at the centre of our national gas agenda. Its success matters not only to NLNG, but to Nigeria’s economic future,” the President said.
Tinubu commended the progress recorded on the project, describing Train 7 as a benchmark for project delivery, partnership, Nigerian content development and investor confidence.
He assured the NLNG management that the Federal Government would continue to improve the business environment, provide greater regulatory clarity and remove bottlenecks affecting major oil and gas investments.
“Nigeria is open for business, but it must be business that creates value at home — building capacity, supporting communities, protecting the environment and contributing to national prosperity. NLNG must continue to lead by example,” he added.
Responding, Falade thanked the President for his administration’s support for NLNG and the broader gas sector, assuring him that the company remained committed to the safe and successful completion of Train 7.
“With the project now over 90 percent complete, our immediate priority is to deliver the remaining work safely, efficiently and to the required quality, while preparing the plant for reliable and sustainable operations,” Falade said.
He said the project would increase Nigeria’s LNG production capacity, support export growth, create opportunities for Nigerian workers and businesses, deepen local participation and generate greater long-term value from the country’s gas resources.
Falade also restated NLNG’s commitment to supporting the domestic LPG market and improving access to cleaner cooking fuel for households and businesses.
He, however, called for coordinated action among the Federal Government, regulators and industry operators to increase domestic supply, improve storage and distribution infrastructure, eliminate avoidable costs and create a more transparent and efficient LPG market.
“Improving LPG accessibility is important to Nigeria’s energy transition and to the wellbeing of millions of Nigerian households. NLNG remains committed to supporting the domestic market, but improving affordability requires coordinated action across the entire LPG value chain,” he said.
The NLNG chief also sought the President’s intervention in addressing ease-of-doing-business challenges, particularly the proliferation of taxes, levies, charges and regulatory demands imposed by different tiers and agencies of government.
According to him, multiple and sometimes conflicting fiscal and regulatory obligations raise operating costs, create uncertainty and could discourage existing operations and future investments.
Falade assured the President that NLNG was ready to align more closely with the Federal Government’s development agenda and explore additional areas of partnership.
The meeting ended with a renewed commitment by the Federal Government and NLNG to sustain momentum on Train 7 as the project enters its final phase.
Both sides also agreed to strengthen their partnership to support the project’s successful delivery and NLNG’s broader contribution to Nigeria’s gas development and economic growth.
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