‘Over 80m Nigerians shun capital market’

Out of about 170million people, the number of Nigerians with
no investments at the nation’s capital market have so far
grown above 80million, it has been revealed.
According to the President of the Chartered Institute of
Stockbrokers (CIS), Mr Albert Okumagba, this lack of appetite
for investment was the reason for the domination of the
market by offshore investors who control over 60 per cent of
its activities.
Recall that the immediate past Director General of the
Securities and Exchange Commission (SEC), Ms Arunma Oteh,
had late last year lamented that the market was not where it
should be, considering the nation’s immense potentials.
“The ratio of market capitalization of listed stocks to GDP in
Nigeria is very low at only 16 per cent, compared with 247 per
cent in Malaysia; 207 per cent in South Africa and 112 per
cent in Brazil. The bond market has a lot of room for growth
with debt-to- GDP ratio at only 11 per cent, compared with
over 200 per cent in Japan; 110 per cent in Singapore; 103 per
cent in the United Kingdom; 103 per cent in the United States
(US) and over 60 per cent in China. The ratio of net asset
value (NAV) to GDP in Nigeria is only 0.2 per cent compared
with 77 per cent in the US; 30 per cent in South Africa and five
per cent in India.”
Describing the situation as unacceptable during a courtesy
visit of capital market community to the acting Director
General of the Securities and Exchange Commission (SEC),
Mounir Gwarzo, in Abuja, Okumagba, lamented that the level
of participation of domestic investors is less than three million
when, ideally, over 80 million people should be in the market.
He added: “Our coverage of insurance assets in Nigeria is not
up to two per cent of insurable assets. If we can increase
from two to 20 per cent and then to 50 per cent, we will be
shocked at the kind of contribution that insurance can make.
For pension, coverage, it is about eight per cent. If Nigerians
that are supposed to be captured by the Pension Reform Act
come on stream, we can do multiples of the N4.7trillion that
has been mobilized. We have opportunities for our own
domestic investors. The pension companies have over $25
billion which they have taken as money. Even though, they
have a room of about 25 per cent to invest, only about 12 per
cent of that has been invested.”
Responding, Gwarzo assured his visitors that the Commission
would continue to ensure that the market remains vibrant in
order to attract investors both locally and internationally. He
promised that the current management would strive to
develop domestic investment from retail and institutional
investors.
“We will step up to reach out to the market and improve
investment. On the international side, what is most important
is the enabling environment. Right now, the rules are very
friendly and that is why we keep changing them from time to
time to suit best practices and attract investors”, he added.
Before her tenure expired early this month, Ms Oteh had
recommended that the market stakeholders should focus on
collective investment schemes to enable more Nigerians
participate in the market growth.