The President of the Chartered Institute of Stockbrokers of Nigeria, Oluwole Adeosun, plays a multidimensional role in Nigeria’s capital market. The former banker and chief executive officer of Chartwell Securities Limited, in this interview with BAMIDELE FAMOOFO, gave a deep insight into the activities of the Nigerian stock market and the ways to further enhance its current performance. He argued that the surest way for the government of President Bola Tinubu to achieve its six per cent economic growth is by adopting the Public Private Partnership model among other issues

You talked about adopting the PPP model to achieve economic growth at your last conference. Can you shed more light on this?

The CIS National Workshop is one of the principal events of the Institute and is held every two years. It is a national economic policy guiding event, where the Institute brings together experts from various relevant sectors of the economy to share analyses and give insights on key policy areas that have a significant impact on the economy. As the new Federal Government under President Bola Tinubu settles into office, one of its most important goals is to accelerate the growth of Gross Domestic Product (GDP) in the country. It has been established globally that one of the most effective routes towards achieving fast-paced growth is the adoption of public-private Partnerships. This has been tried in Nigeria, but not as much as the CIS believes should be. Our prognosis is that using the Capital Market will significantly enhance the effectiveness of Public Private Partnership projects in Nigeria. The 2023 CIS National Workshop was a very successful one and a comprehensive economic policy blueprint, from the Capital Market’s perspective, will be presented to the Federal Government very soon.

Will you say the equities market has met your performance expectations in recent times?

The index growth has surpassed historical levels with the full participation of local corporates and individuals as opposed to foreign dominance which had characterized the past. In other words, the equities market has been quite impressive this year and investors have been smiling home on a consistent basis with good dividend declaration and capital gains by quoted companies. Just yesterday, one of the quoted companies, UBA Plc joined GTCO and Zenith Bank Plc to announce a 50 kobo per share interim dividend. Stanbic IBTC and Fidelity had also announced N1.50 and 25 kobo respectively. We saw the way the market reacted positively to the successful General Elections and Inauguration of President Bola Tinubu with the attendant reforms implemented. The market is really doing well and I will advise more local investors to join the train and share in the benefits.

What measures should the government put in place to attract both foreign and domestic investors?

The role of government in businesses worldwide is to provide an enabling environment that will allow productive enterprises to flourish. By enabling environment, we mean rule of law, provision of adequate infrastructure etc. The government must create a savings friendly economic environment, and then, continuously work towards improving the Ease of Doing Business ranking of the country, to make it a competitive investment destination.

Tax policies should be reviewed to encourage investments and not the other way round. For example, the recently introduced Capital Gains Tax will discourage high volume investments, and should be removed for now, particularly in view of the fragile nature of our economy and capital market. We need to encourage more investments.

The government should listen to us more; have more consultations with the Capital market in policy formulation. Steps should be taken to extend trading liquidity to the stock market, as is done in the advanced countries. Our pension funds should, as a matter of national interest, invest a higher proportion of their funds in the equity market to provide a stable foundation that motivates other high net worths to invest over the long term; and the Central Bank of Nigeria should pay more attention to the stock market, allow bank stocks to be included in margin lending portfolios being the most active and liquid stocks and encourage banks to partner more with Stockbroking firms. We cannot still be living in the past and be looking forward to a better future.

How will the unified exchange rate policy impact the capital market?

That is one of the urgent policy corrections that the Nigerian Capital Market has been canvassing for in recent years. The wide gap between the official and parallel market rates is an anomaly which creates room for so many market malpractices. By creating a more efficient and transparent foreign exchange management system, the unified rate policy will make the market more competitive, make the currencies more easily accessible to manufacturers and other end users, and improve the bottom line for our quoted companies.

The transparency that will evolve from determining the rate will boost the integrity of the exercise which is expected to excite foreign investors to make a return to our securities market. There cannot be a perfect unified rate. But if the margin between the official rate and other windows is within 3 per cent range, it is normal. But the supply side of the forex has to be addressed as a basis to ensure that forex scarcity will not hamper the success of exchange rate unification in the medium and long run.

Are you concerned about the recent drive drove of delisting of companies? GSK, PZ are examples.

The freedom to enter and exit the market is a cardinal characteristic of any stock market, so our market is not peculiar in that regard. However, the market regulators need to engage the exiting companies to find out if there are any fundamental issues that need to be addressed; for example we may need to look at the listing conditions and so on.

Much as there are many benefits of quotation, they also come with obligations. For instance, a quoted company is believed to operate at high ethical standard, including adherence to corporate governance and implementation of ESG (Environment, Social and Governance) in their reporting. These companies cannot evade tax and they contribute significantly to government tax revenue in Nigeria. A quoted company is believed to be operating at global best practices.

The companies must comply with Post Listing Requirements of the exchange where they are listed. These obligations revolve around regular provision of information on the financial performance and any other price-sensitive information, including how they meet expectation of their shareholders. The obligations come with cost implications.

Companies operate in the economy and the economy is the underlying asset for the securities exchanges. At the basic level, the stock market is a barometer for the economy and cannot operate at variance. Companies apply for delistment for a number of reasons; including inability to comply with the post listing requirements due to dwindling financial performance, change in strategic focus, whereby a private equity firm buys the company over.

Delistment can be voluntary or forceful. It is voluntary when the company initiates the move through an application to the Exchange. The Exchange ensures that the shareholders are not cheated in the process, if it involves asset striping; the exchange makes sure that the legal process is followed to the letter. Delistment can affect shareholders positively and negatively. For instance, it could boost their shareholding in the new private company. A company can delist from NGX and seek admission to NASD PLC, a OTC Exchange. But shareholders may also lose out if the money realized from asset stripping has been used to settle debt obligation.

Some companies delist because of tough operating environment. There is really little or nothing that NGX can do to prevent this. The Exchange has a prerogative to force a company to delist if it is involved in illegal business such as production of firearms. Government should begin to be more creative by expanding the obligations under ESG to private companies that have some threshold of revenue. This will create a level playing field for these companies and their quoted counterparts. At the moment, it is becoming more of a burden to be a quoted company. Government should encourage quoted companies with incentives such as tax holiday at the point of seeking quotation and patronage of products and services of quoted companies to encourage more companies to list on a securities exchange.

How would you advise investors under the current business environment?

This is an excellent time to invest, with the guarantee of democracy in the country. The market will grow as the policies of the new government take shape. Having said that, please ensure that you always consult a qualified and licensed Stockbroker to guide your investment decisions. You may visit the CIS or SEC websites for the list of qualified operators, or the websites of the various securities trading platforms. Investors should contact their stockbrokers for effective investment advice. Investment is a tradeoff of risk and return. An investor can make money in all seasons with appropriate investment advice.

Can you give your assessment of the Nigerian Stock Exchange (now NGX) after it was unbundled about 2yrs ago?

The dematerialized Nigerian Exchange Group Plc is adjusting well from its former status as a non-profit organisation. The market is now business-oriented and there are positive signs that the objectives will translate into a more robust and efficient market and satisfactory profits for shareholders in the next few years.

Will you say stockbrokers are occupying their rightful position in both the capital market and the economy at large?

With our consistent advocacy and sensitization engagements, the Securities and Investment profession is getting more recognition and very soon we will attain the global best standard, which is that the capital market drives economic growth in the advanced or developed countries. Nigeria is still a bank / short-term financing – dominated economy, but what really drives fast-paced growth is long-term investments and finance, with impacts on infrastructural development in particular, and this is where the capital market comes in.

We are intensifying efforts towards getting more stockbrokers involved in the economy management. However, let me recognize His Excellency, the Executive Governor of Edo State, Governor Godwin Obaseki, and the Honourable Minister of Finance and Coordinating Minister for the Economy, Mr Wale Edun,  as seasoned stockbrokers. We also have many members as commissioners as well as legislators in the National Assembly.

The Nigerian stock market still needs to be deepened. How can this be achieved?

Our trading platform /operators need to develop more investible products, while more companies, especially those in the commanding heights need to be encouraged to list. To achieve these, the market conditions need to be flexible while certain operational concessions such as tax concessions are offered to the market.

How will you respond to the death of Pa Akintola Williams?

Pa Akintola Williams was a great iconic personality who lived a fulfilled and exemplary life as the first indigenous Chartered Accountant in Nigeria. He was a quintessential trail blazer who left an indelible mark in critical spheres of the nation as one of the founders of the Lagos Stock Exchange in 1961 which created the platform for the evolution of Capital Market in Nigeria.

The Lagos Stock Exchange later became The Nigerian Stock Exchange which was recently demutualised. He was the last living signatory to the Memorandum & Articles of Association of the Nigerian Stock Exchange.

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