Let the benefits of capital market be all embracing-Omanukwue

It is not something that is new. So, if we should have various trading floors, which of course we have presently, it will be good.

We have trading floors in Benin, Onitsha, Kaduna, Maiduguri, Ibadan, Yola, Port Harcourt and a whole lot of other places. I think with time and development, more and more trading floors will spring up. So, if you decentralize trading, there is nothing wrong; rather what you are doing is helping to accelerate the deepening of the market. I think it is in tandem with global development, global best practices. I think it is good for the market.

 What is happening today in the capital market is clearly a demonstration of what the country can achieve or what the people can achieve, if they consciously make up their minds to drive their economy. What is happening today all started with the bank capitalization. We saw how the banks came to the market. That time, there were a lot of sceptics; a lot of people did not believe that the market has the capacity to deal with those issues that were coming. But we found out that the market has developed even beyond expectations. The market today has been wide enough to accommodate all the issues. And there are a whole lot of issues that are coming in. The market has been able to rekindle interest in investment in stocks. So the determinants of the market include the state of development of the economy; the performance of the companies themselves; the individual perfection which you call manipulation; individual perception of the stocks and the sectors. I don’t call that manipulation; I call them individual perception of the stocks in which they want to invest their funds in.

That issue is a very touchy one. It is difficult for me as a practitioner to make a categorical statement on such matter. However, I understand presently there are some colleagues of mine who are pursuing that goal, trying to see if there could be reduction from the present N1 billion to something less, say N500 million. If you look at the various arguments that are going on, you find out that those for, and against, have their own points. I think that the increase in the capitalization would make us much more professionals, make the market stronger, make practitioners committed to their profession; then I am 100 percent in support of it. But we need to be very careful so we do not do things just for the sake of doing it. The stock broking business is quite different from banking. They are all financial businesses all right, but let us not fall into the same trap because we increased the capitalization of banks. There must also be the increase of capitalization of stock broking firms. We need to increase the capitalization of stock broking firms, no doubt.

We need to have stronger companies operating financial services within the system. Banks are the custodians of people’s money; they need to be properly capitalized so that they can be stronger. Stock broking companies don’t. What they do is manage assets and manage funds. But it is not to say you must have weaker companies that are not properly capitalized as stock broking firms. So, it is neither here nor there. But whichever way it goes, for me, the important thing is that at the end of the day, we have strong companies that are providing financial services in the country. Are those companies credible? Are they professional enough? Do they have talented people that are able to provide professional services in a manner that compares with global best practices? This is what should matter in the issue of increasing capitalization of stock broking companies.

We need to have stronger, more professional financial service institutions in Nigeria to enhance credibility and put us in a position where we can compete globally.

Banks are facing enormous challenges. So what the Central Bank Governor has done is to raise the consciousness of banks and make them understand their true responsibility in economic development. I don’t have any problems with banks coming to raise fresh money from the market to shore up their capital base. It is important that banks should contribute truly to development; we must have big and stronger banks. If the banks begin to respond to that economic goal, at the present value as the governor of CBN puts it, it is very much in order.

We need bigger banks; we need banks that can compete globally. If you look now, the top five biggest banks in Africa all come from South Africa.  May be, top 10 banks in Africa; some two-three years ago, before the increase in banks capitalization in Nigeria, may be two banks from Nigeria, may be First Bank and may be UBA.

So, for a country as big as Nigeria with this kind of economy needs bigger and stronger banks; banks that can move out of the shores of Nigeria to compete in other countries within Africa and outside Africa, and for our banks to do that, they need strong capital base. So I think that what they are doing is clearly okay in line with global best practices. We need banks that will compete internationally. So they will continuously come to raise money from the market so long as that remains an objective.

It is an open market whether banks, insurance companies or manufacturing industries. The market is open, so it is the investors’ decision. At the end of the day, it is what the investors’ want that actually happens. It is a demand and supply thing and is left for the investors to decide. The Nigerian market is the largest market in Africa. So, as long as our market remains large, you will continue to have companies, whether banks, insurance companies, manufacturing and companies from other sectors of the economy come to the market. Take for instance, BAGCO. Nobody thought BAGCO would come to the market, but its offer is eliciting a lot of responses. I mean, as a stockbroker, you see people looking at BAGCO as a company they can invest in. It means that any company that wants to come to raise fund is free to come to the market. The banks are not dominating anything because there is still a lot of money in this economy and more investors today who are more discerning, smarter and see the stock market as a veritable means of building their portfolios. So I don’t think they are overstretching investors. It is a matter of perception.

 I am more in support of investment in the capital market than the traditional buying and selling of tangible goods. Investment in any company is to help the company grow, increase productivity, provide employment and also increase its scope of capacity and produce goods and services. I feel more comfortable investing in Nigerian companies quoted on the NSE than buying and selling tangible goods. This is because it makes us less dependent on foreign products but helps to generate our local productive capacity. It is better for us as a country that money generated here in our country is re-invested and find their way into the enhancement of productive capacity.

It is good. We should always benchmark ourselves with global best practices. So, if we should ask ourselves what are the global best practices and where we are? So, the massive automation, e-bonus and the e-dividend introduced in the market is very good to the market. It is an attempt to move practitioners to global best practices which is what it should be. This is because at the end of the day, we should be able to compete with the best in the world. We can not do this unless we line ourselves with the best in the world.

There may be problems. When you introduce a new thing, it will have initial hiccups but at the end of the day, it will be good for the economy. That is what obtains in developed capital markets.

Yes, it will not only remove fraud, it will reduce clumsiness in transactions, increase efficiency, make the transaction process faster, and shorten the turn around maintenance in transactions.

Of course, at the end of the day, it will make transactions more experienced, more transparent and definitely when you bring all these factors, it will reduce fraud in whatever form.