By Kingsley Ighomwenghian, FINANCE EDITOR, Lagos
President Goodluck Jonathan has asked his Economic Management Team, chaired by his Deputy, Namadi Sambo, to prevail on oil and telecommunication companies to list their shares on the Nigerian Stock Exchange (NSE).
Securities and Exchange Commission (SEC) Director General, Arunma Oteh, said this is expected to provide an upsurge in the number of listed companies, and by implication, market capitalisation.
It will also ensure that Nigerians are part owners of those companies, many of which are listed on their home exchanges in Europe and South Africa.
Oteh made the disclosure at the weekend in Lagos at the investiture of Governor Rotimi Amaechi of Rivers State as “Man of the Year 2010,” by Independent Newspapers Limited (INL).
She noted that Nigeria’s telecoms industry is the fastest growing anywhere, with official figures showing that subscribers stood at 83 million in 2010, nine years after mobile telephony was introduced in August 2001.
“Nobody expected that the Nigerian telecoms industry will grow as much as it has today. MTN makes 40 per cent of its profit from Nigeria. Talks are ongoing to encourage them (MTN, Globacom, Barti Airtel, and Etisalat) to consider listing on the NSE,” she said.
MTN is listed on South Africa’s JSE Limited (formerly the Johannesburg Stock Exchange), but most oil conglomerates like Shell, Total, Chevron, Agip, ExxonMobil, and Texaco, among others with multi-billion Dollar assets, rebuffed previous moves to get them listed in Nigeria, even when they are listed on exchanges in Europe and the United States.
The attempt by the government to get them listed saw them playing a fast one by listing only their capital intensive but low income petroleum marketing businesses, keeping away the exploration side from the prying eyes of regulators.
Oteh, who delivered a paper on “The state of the Nigerian capital market,” noted that since she assumed office in January last year, the SEC has, as part of building a world class capital market, insisted on zero tolerance for infractions, and ensured “that the cost of wrongdoing is higher than doing it right.”
She recalled that before January last year, the capital market was under regulated and lacked integrity, a very essential ingredient for the growth and development of any capital market.
Besides sanitisation of the market, Oteh noted that it has been further diversified by strengthening the fixed income leg by growing the market for Federal Government, sub-national and corporate bonds.
Infrastructure deficit, she stressed, abounds and offers opportunities in such areas as the power sector where an estimated 40,000 megawatts is needed.
She lamented the situation where many small and medium-scale enterprises are in the throes of death, unable to provide.
Oteh decried as unacceptable the situation where an entrepreneur generates his own electricity, and provides water and security, among other social facilities that are the primary responsibility of the government.
She noted that such unnecessary costs make Nigeria’s business environment more expensive and unfriendly.
She, however, praised Abuja’s decision to establish a Sovereign Wealth Fund (SWF) with a N1.0 billion take off fund, which “will be a catalyst for (attracting) investment – whether local or foreign.
Oteh also acknowledged the pension reforms, resulting in a pension asset of about $13 billion, a foundation for reforming the capital market, apart from being a framework for growth as people gain more confidence and begin to invest long-term.
She cited the example of Brazil, an emerging global economic force, saying, “The interplay of capital market and economic development is one reason for the successes recorded by Brazil.”
She urged Nigeria to take example from Brazil, recalling that 20 years ago, that country was notorious for poor use of its natural resources, despite its huge population of 150 million.
In 15 years however, and with purposeful leadership, Oteh said Brazil has become the largest economy in Latin America with a Gross Domestic Product (GDP) of $2 trillion, which is 10 times Nigeria’s.
Brazil also has an inflation rate of six per cent, compared with 11.2 per cent in Nigeria. Brazil’s capital market has a capitalisation of $1.37 trillion, against Nigeria’s $70 billion.
It is possible, Oteh stressed, for Nigeria to attain that height, with purposeful leadership in the public and private sectors.
She praised Amaechi’s efforts to diversify the economy of Rivers State from oil by investing in agriculture.
She noted that the state currently has a GDP of $21 billion, the second largest after Lagos, with focus on education, infrastructure, job creation, and healthcare.
“Amaechi’s focus on education is something we must acknowledge (just as) the 120 medical centres around Rivers State are extremely important, she said.
Oteh equally cited the transformation of Rivers from one in which there was daily news of kidnaping of oil workers to one in which foreign multinational firms like “SABMiller (South African Breweries) has made Port Harcourt its headquarters in Nigeria, among others.”
She challenged Abuja, states, and councils to focus on “economic transformation, building a very strong municipal bond market.
“We cannot transform Nigeria only from the centre, but from all sides.
Bismark Rewane, Financial Directives Chief Executive, also congratulated Amaechi for turning the state into an “island of excellence (that should be) copied and replicated across the country.”
Amaechi thanked INL for the award.
He recounted that on assumption of office, “The first problem we saw was poverty,” and warned that unless social injustice is reversed and infrastructure provided, locally produced goods and services will never compete favourably with imported ones.
“To do business in Nigeria, you have to generate (your own) power. (Competitive business environment) can never be until we become serious with governance.
“Address social security by putting massive infrastructure in place to create employment, ensure provision of electricity, leading to employment generation.
“When you deal with social security, you would have dealt with physical security. The government should diversify the economy. You need to focus on agriculture. The government can divert funds from oil and invest in agriculture,” Amaechi canvassed.
He promised that if re-elected he will add to the state’s 400 primary schools and 24 model secondary schools already built.
He promised to continue with free education and healthcare.
“We have enough power in Port Harcourt. You people must help us beg the Federal Government to allow us distribute this.”
The current law vests power distribution solely in the Federal Government, and should be changed, Amaechi pleaded.