DG, Securities and Exchange Commission, Arunma Oteh
Obinna Chima with agency report
Investors in Nigeria’s power assets may be required to list on the Nigerian Stock Exchange (NSE) in the next five years as the bourse targets a $1 trillion market value by 2016.
The Director-General, Securities and Exchange Commission (SEC), Arunma Oteh, disclosed this in an interview with Bloomberg.
The government recently approved preferred bidders for the power assets which included Siemens AG (SIE), Korea Electric Power Corporation (KEPCO) and Transnational Corporation (Transcorp), amongst others.
According to Oteh, requesting that the companies to list shares on the NSE would make the exchange more representative of the country’s economy.
Oteh said that only about 17 per cent of Nigeria’s economy was reflected on the market.
The NSE had attempted to encourage listings and bring bigger trading volumes by introducing short selling, market making and securities lending this year.
“Within a five-year period, these companies will be expected to list,” said Oteh, citing discussions with the Bureau of Public Enterprises, which is responsible for the privatisation process.
“We cannot make the mistake that we made with telecoms which were granted licences in 2001 and weren’t required to list their shares,” she said.
None of the main four telecommunications companies, including Africa’s largest operator MTN Group Limited (MTN), are listed on the NSE.
Oteh said she was not considering making listing compulsory for them now.
Royal Dutch Shell Plc’s local unit, which is the West African country’s biggest private oil company, is not represented on the market either. Oteh said it made “good business sense” to be on the bourse.
“They need to invest and invest aggressively, so I don’t even agree that there’s sufficient cash flow that they need financing, but more importantly people can have empathy for these companies,” she said.
Oteh argued: “We have had vandalisation of pipelines, we have had base stations being blown up. If people in those neighbourhoods had even one or two shares in these companies they would protect these base stations or pipelines like hawks.”
Continuing, Oteh said SEC would approve rules for Islamic-compliant Sukuk bonds in the first quarter of next year, with a number of states including South-western Osun waiting to issue debt.
While states have been selling conventional bonds to finance projects such as infrastructure development, the Muslim in the country were unable to participate, Oteh said.
“For me it’s a financial inclusion issue, you have a very high population of Muslims in Nigeria and it will just ensure we comply with some of their religious requirements,” she said.
On the bond market, she disclosed that three trading groups had either received or are about to receive SEC’s approval to start retail bonds trading next year.
This, she explained, would give the public access to fixed income securities now dominated by institutional buyers.
These include the Lagos bourse, the Financial Market Dealers Association and the National Association of Security Dealers.
“What we want is that most trading, including over-the- counter, is within our purview. We are very excited because it certainly brings more transparency to the market, it brings more depth,” she added.
The introduction of the NASDAQ OMX Group Incorporated trading platform on the NSE may become functional by the end of 2013 , Oteh revealed.
According to her, English-speaking West African countries led by Ghana are pushing Nigeria to make the platform a common regional market with representatives of the countries exchanges and regulators meeting in Nigeria to discuss the idea.
“It is large enough of a platform and in West Africa there is a move toward integration of the markets and it is not being driven by Nigeria its being driven by the other smaller markets. Nigeria’s market is big, so the opportunities for cross listing for companies from West Africa to list on the NSE and vice versa are very important,” she added.
The Nasdaq platform, which was signed in April, will allow the bourse to have options in 2014 and futures in 2015 to help deepen the market, said Oteh.
A restarting of the Abuja Securities and Commodities Exchange may be ready within 12 months, Oteh said.