Alhaji Aliko Dangote
Goddy Egene writes that the judicial reinstatement of Alhaji Aliko Dangote as the President of the Nigerian Stock Exchange (NSE) is an interesting development, but adds that he will have his work cut out in restoring confidence and aiding the market’s recovery
Leading industrialist and president, Dangote Group, Alhaji Aliko Dangote was a fulfilled man on August 6, 2009 when he was elected president of the Nigerian Stock Exchange. Dangote’s election as the 17th president was unique because it was a by unanimous acclamation by council members.
Describing the election, the then director general of the NSE, Prof. Ndi Okereke-Onyiuke, said, “It is interesting to note that a remarkable feat was achieved with Dangote’s appointment. For the second time in the history of the NSE, the president did not emerge through voting. He emerged after a unanimous acclamation by the entire members of the council.”
Dangote, thereafter, took over with promises to ensure that the nation’s stock market regained momentum. However, seven months later, his reign was disrupted by a court ruling which nullified the election. But after patiently waiting for two years, Dangote reclaimed the NSE presidency last week after an Appeal Court upturned his removal.
When he sauntered into the premises of the NSE for the council meeting last Tuesday, it was a very warm welcome the Forbes 2011 richest man in Africa received from all stakeholders.
Keying into the Capital Market
For many years, Dangote has been a shrewd businessman quietly running and expanding his business empire which covers cement, telecoms and food, among others. But some operators in the capital market and council members of the NSE had to approach him to broaden his investor-base by listing some of his companies on the exchange.
Apart from deepening his investor-base, it was acknowledged that he would be a very invaluable asset to the growth of the stock market. Seeing the advantage to his business, the business mogul obliged and got Dangote Sugar Refinery Plc to list on the NSE in 2007. The listing of Dangote Sugar was historic because its initial public offering (N54 billion) in 2006 was the largest at that time. Besides, 11 issuing houses packaged the offer.
After the successful listing of Dangote Sugar, Dangote Flour Mills Plc followed suit. Currently, four companies in the Dangote Group – Dangote Sugar, Dangote Flour Mills, Dangote Cement and National Salt Company of Nigeria Plc (NASCON) are listed on the NSE. In fact, the companies in the group account for over 26 per cent of the market capitalisation of the equities market.
In recognition of his commitment to the development of the market by listing his companies, Dangote was invited to join the council in February 2008 as the chairman representing the Kaduna/Kano/Yola Zonal Council on the exchange. He later became the first vice president, a position he occupied before his election in 2009.
Before the NSE Annual General Meeting, where Dangote was elected president, speculation was rife that some council members were opposed to his emergence and concerned about his domination of the exchange. Using his alleged involvement in the share price manipulation of African Petroleum Plc (now Forte Oil Plc), for which he was cleared by the Investment Securities Tribunal, they moved against his emergence as the president of the council.
These speculations, notwithstanding, were waved aside by the council members, who maintained that they were one big family. In confirmation of that assertion, Dangote was eventually elected president. However, seven months after, he was removed by a Federal High Court in Lagos following the application made to the court by some shareholders of African Petroleum, suing him, Nova Finance and Securities Limited, the NSE and others over the alleged share price manipulation.
The shareholders had approached the court for an order restraining the NSE and the Securities and Exchange Commission (SEC) from retaining Dangote as the first vice president and member of the council of the NSE, pending the determination of the suit. They also sought an order restraining Dangote from remaining the first vice president and member of the council of the NSE.
Appeal and Reinstatement
Consequently, Dangote was forced to comply with the court ruling and vacated the NSE presidency. But he appealed the judgment, which was upturned penultimate Friday by the Appeal Court in Lagos, which upheld his appeals.
Reacting to the judgments, Dangote said he was satisfied with the ruling, as it had vindicated his position all along that he should not have been removed as president of the stock exchange’s council. According to him, his first priority would be to continue with the reforms started by the present NSE chief executive officer, Mr. Oscar Onyema, improve governance and transparency, and restore confidence in the market.
His reinstatement elicited positive response among operators and stakeholders in the market, who said it was a good omen. Even, the chairman of Forte Oil Plc, Femi Otedola, whose company’s shares Dangote was alleged to have manipulated, has congratulated the NSE president. On their part, stockbrokers hailed Dangote’s reinstatement, stating it was good development for the market because it has removed many inhibitions hitherto affecting investor confidence and the development of the market.
A past president of Chartered Institute of Stockbrokers (CIS), Mr. Dipo Aina, said the resolution of the cases had cleared most issues that some people were using to perpetuate illegality in the Nigerian bourse. “With the court ruling, the picture is now clearer. The cases have been cleared and this is a good development because the cases have been impeding so many issues that could have helped in the recovery of the market. Now that the cases are over, we should learn from our past mistakes,” he said.
Aina, who is the managing director of Signet Securities and Investments Limited, added he liked what Dangote said that he would accord stockbrokers their appropriate place on the council of the exchange. “We can now move forward because there are no more inhibiting factors again,” he declared.
Also in the opinion of leading financial analyst and Managing Director of Financial Derivatives Company Limited, Mr. Bismarck Rewane, the return of Dangote is good for the market. “He is a stakeholder in the market first and foremost, and do not forget he is the richest man in Africa. He can create value for the market. Dangote has nothing to gain but he has everything to give to the market,” Rewane said.
Repositioning the Market
Dangote presided over the NSE Council meeting last week where members of the council pledged to support him. Noting the recent reforms at the exchange, he expressed his appreciation to all council members for their contributions to the market. He also expressed his gratitude for the warm reception he received from council members.
Among the issues considered at the meeting were the recent directives issued by the board of SEC that the individuals nominated by the commission to the council of the exchange, in the public interest, should disengage in an orderly manner.
The council was of the view that the disengagement process of these SEC nominees must be done in such a way that will enhance market confidence and ensure continued stability of the exchange and the capital market. The council decided that Dangote should consult with stakeholders in order to reach an informed decision on the timing and manner of the disengagement, as well as reconstitution of the council.
According to some analysts, one thing that is certain is that Dangote’s return to NSE would lead to a series of reconciliation that would resolve all outstanding legal issues. “I can tell you that going forward, stakeholders would ensure that the reconciliation process would begin so that key actors in the NSE crisis would come together and resolve their differences. And this will put the market in better stead for the on-going reform effort to take root,” an analyst said on the condition of anonymity.
In addition to resolving outstanding litigations, Dangote’s presidency will also have to chart a way for the transparent demutualisation of the NSE in manner that it is a win-win for its members and the public. He would also have to lead the drive to implement measures that will make the Nigerian bourse more attractive to foreign and local firms that might want to get listed.
In the area of market deepening, Dangote will have to liaise with the Central Bank of Nigeria and the National Pension Commission to encourage commercial banks and the Pension Fund Administrators to provide liquidity for the 10 market makers appointed by the NSE to take positions and set the direction for the market. But for this to be realised, the market makers must meet minimum standards in terms of capitalisation and Information Communications Technology (ICT) infrastructure deployment to ensure that trading is seamless.
But more importantly, given his interest in four companies listed on the bourse that account for over a quarter of market capitalisation, Dangote will have to transparently declare his interest and adhere to the code of corporate governance that will not call to question his credibility as president of the council.
Given the roller coaster that the equities market has been through since 2008 and need to restore confidence, Nigeria can ill-afford to have another era of insider trading and abuse of the scale witnessed in the past.