The President/Chairman of Council, Chartered Institute of Stockbrokers, Mr. Oluwaseyi Abe, is not comfortable with the ‘very slow approach’ of the Federal Government towards proffering solutions to major economic issues affecting Nigerians. In this interview with Ngozi Amuche, the Executive Director of Magnartis Finance and Investments Limited, says the FG must be proactive in tackling the economic recession that has eaten deep into the fabrics of the nation. Excerpts:
How much is the economic recession affecting the capital market landscape?
The landscape in the capital market is a success, which means the fundamentals of the market are the fundamentals of the economy and that is because the capital market is a barometer to measure the wellness of the economy across the globe. If the economy is down, there is an indication that the capital market is down, too. If the capital market is down, the money market will be down and vice versa. But it does not mean the market will crash, the fundamentals are still very strong and it will rebound shortly.
How has policy inconsistency affected the capital market?
It has affected the market to a certain extent. The government has not been fast in approaching issues affecting the economy and the market. The forex policy is slow in reaction, maybe in the long run or may be government needs to be more apt, especially to make sure that dollar is in supply and at a very good rate. You will notice that we are physically import-dependent in Nigeria; we import everything. Look at what is happening in the aviation sector where some airlines are closing down because they could not import service parts and also get dollars to operate. So, if we are import-dependent, the government must come to that realisation and implement policies that would help in the desired turnaround. One thing about democracy is that if you take a policy and it is working, you tend to work more, but if it is not working, you should be quick to reassess the situation as well in the interest of the economy.
What is the update on the recapitalisation of the market operators and how has that boosted transaction in the sector?
We have concluded the recapitalisation exercise and that means we have more capital to do mega transactions. But amongst that, we still have a lot of issues in terms of working in the market. What would we do with our money if the market is not settled? We need to address the key issues in the economy for us to have a vibrant stock market. The market operators and the regulators have tried but the government needs to create a more business friendly environment.
There are several moribund companies listed on the Nigerian Stock Exchange. Many of their share values have dropped to the nominal value of 50 kobo, which is the lowest. As an operator, what is their fate?
The challenge is that a lot of companies do not have business in the first tier market and they are listed there. The minimum requirement to get listed on the first tier market is tougher than when it comes to Small and Medium Enterprise section. If a company cannot survive in the first tier, you can drop to another platform, which is cheaper with less conditions. If you think you are not doing well in the 1st tier, you come to the second tier. If you cannot stay on that platform also, you come to NESD, but if you have gone to seek debt instrument and you are seeking listing of stock instrument, then you can now consider FMDQ.
What are the problems facing stockbrokers in the market?
The major problems faced by stockbrokers is dearth of the market. The market is dying, so government needs to do a whole a lot. They said we should recapitalise and we have done that; there must be a good market place for us to interplay and government should start implementing policies that will encourage companies to be listed on the exchange, especially the small businesses because they are the engine of any strong economy. Also, it is very key for us to list multi-nationals like MTN, Glo and Etisalat, among others. It had happened before in China and other developed nations.
Recently the NSE, initiated the direct cash settlement to curb infractions in the market. Do you believe that is all we need to curb infraction?
Absolutely, it will curb infraction. Direct cash settlement is a process where cash proceeds from trades executed by brokers on the exchange settles directly into investors’ bank account. It starts when a client gives his broker the mandate to sell his or her shares. Once those shares are sold, payment is made directly into the client’s account. This is in contrast to the old practice where proceed from sale of securities is paid directly into the stockbroker’s account and stockbrokers then deduct transaction fees and remit the balance to the client’s account. Historically, issues had risen on occasions when the proceeds of sale were not remitted into the clients’ accounts, thereby necessitating the need for the initiative. But the unfortunate thing is that it won’t succeed for now.
The regulators need to educate investors in order to increase the number of banking public because several investors do not have active bank accounts and that means they stand a chance to be cheated by some fraudulent operators. If that is not done, they do not have a business in the stock market. We need to go to the interbank and make sure that people have these bank accounts, they have Biometric Verification Number and they are bankable, then the initiative will succeed and infractions will be reduced.
As the new president of CIS, what are you bringing on board?
A lot. We want to rebrand the profession, increase the scope of knowledge about the market, and encourage operators to be multitalented. We want to bring everybody under one market with different specialisation. Whether you are a banker, petty trader or a fixed income earner, you can participate in the market. We are determined to bring everybody under one umbrella. Apart from that, we are partnering with many institutions across the world.
We are selling the sector to the universities and other higher institutions of learning so that when we have new graduates, as they are graduating with their degrees, they become chartered stockbrokers. This will reduce unemployment rate. We are working with the regulators on that. Then in terms of regulation, we want to increase the courage, the scope and take the capital market to the doorstep of everybody. Nigerians lack awareness of the market and fortunately the Securities and Exchange Commission has brought everybody together under the same umbrella called the Capital market committee.