Capital Market as Economic Growth Driver



Goddy Egene writes on the annual conference of the  Chartered Institute of Stockbrokers (CIS) that held last week, urging the government to use the capital to grow the economy

Capital market provides medium and long-term funding.   Although governments and corporate have raised significant  capital from the Nigerian market, the potential have not been fully maximised.   This was why leading policy makers, economic experts, analysts and financiers said the government should use the market to growth the nation’s economy.

 The stakeholders spoke at the 22nd annual conference of the Chartered Institute of Stockbrokers (CIS)  in Lagos. The conference had as theme: “Nigerian Economy and the Capital Market: Exploring the Next Frontier for Growth.”

Some of the topics discussed included : “Impact of Economic Recovery and Growth Path (ERGP) on the Nigerian Economy ?; “Nigeria Post-2019 : An Agenda for Policy Makers” and “Evolution of the Nigeria Capital Market Structure;” Exploring the Next Frontier for Growth;”  “Regulator’s Role in Building the Capital Market Architecture;” “Sustainable Policy Making and the Digital Economy” and “ How Enabling Policies can contribute to a Robust Capital Market.”

Speakers at the forum  agreed that government needed to correct some anomalies  in national economic policies and declared that the capital market must be used  as the main driver of economic agenda.

The noted that government should provide enabling environment to deepen domestic capital formation as well as incentives to encourage companies and Nigerians to participate in the domestic stock market.

The  Statistician General of the Federation and Chief Executive Officer, National Bureau of Statistics (NBS), Dr. Yemi Kale said   there is a symbiotic relationship between economic growth and capital market development.

According to him,   the government should provide incentives for broader participation in the stock market and deploy its policies to support the development of local institutional investors.

He said a more efficient capital market would have positive effects on corporate performance and the overall economy through reduced costs of operations, domestic access to infrastructure financing, positive effect on aggregate supply, broad-based growth and improved liquidity.

Kale  said while the Economic Recovery and Growth Plan (ERGP) is a prudent policy response for economic recovery and misalignments in the long run, there is need to ensure coherence, continuity, commitment and consistency in government policies and implementation to ensure long-term sustainable growth and development.

On his part, Chairman, Lafarge Africa Plc and Chief Executive Officer, Chapel Hill Denham, Mr. Bolaji Balogun, said that Nigeria has several opportunities to use the markets to achieve all of its key objectives and lift its economy to sustained growth.

He noted that capital markets, in the right hands, can be the ‘strategic weapon’ for sustainable growth as the capital markets can finance Nigeria’s infrastructure, housing, create jobs and alleviate poverty.

According to him, all of Nigeria’s challenges, which represent significant opportunities, have capital markets solutions as the market can be used to finance and invest in developing physical and social infrastructure, housing and real estate.

“Infrastructure will ignite Nigeria’s agriculture and mining, transforming them into big export earners. Infrastructure attracts investments and it is these investments that create jobs. Infrastructure lifts living standards – education, health and these activities will in turn deepen capital markets and improve governance and increase transparency. Ultimately, all of Nigeria and its key stakeholders win,” Balogun said.

He outlined that government should make policies that ensure that all government-owned companies issue bonds for financing and all government-assisted funding and intervention should be issued in bond or investment notes that can be listed on the stock market.

Balogun added that government should make a policy that ensures that any company receiving government concessions or subsidies must issue its initial public offering not later than three years.

He urged government to privatise all major government-owned assets and list such emergent companies on the stock market.

In his contribution, Chairman, Association of Stockbroking Houses of Nigeria (ASHON), Chief Patrick Ezeagu, said that government should use the capital market to drive its infrastructural development.

“The provision of infrastructure is key, but the financing should be driven by the private sector. There should be Public Private Partnership (PPP) in this key infrastructure so that government can pay more attention to the provision of enabling environment that will drive investment and production,” Ezeagu said.

He urged the government to pay attention to policies that will transform the economy faster noting that allowing the Securities and Exchange Commission (SEC), a key government agency that regulates the capital market, to be without substantive director general and board does not indicate seriousness about the capital market.

Also speaking, Managing Director, Cowry Asset Management Limited, Mr. John Chukwu, said there is need for government to be less involved in the financing of key infrastructure and allow the private sector to mobilise capital for these key infrastructure that will drive production and generate employment.

“Government should concern itself in policy formulation and implementation of programmes that will transform the living standard of the people. There is still abject poverty in the country as parents cannot afford to send their children to school and have quality education.  In fact, there is lack of manpower in the education sector and government should find a way of boosting the sector,” Chukwu said.

Senior Special Adviser on Industry to President Muhammadu Buhari, who represented Vice President Yemi Osinbajo, Dr. Jumoke Oduwole, said government is trying its best in addressing some of the economic problems facing the country.

“The Economic Recovery Growth Plan, ERGP has helped in taking Nigeria out of recession in the short term. It has also helped in bring down inflation and growing the economy though marginally. It is helping in providing jobs through the provision of infrastructure, and alleviating poverty among others,” Oduwole said.

President of CIS, Mr. Adedapo Adekoje, said despite the successes of the institute in its primary responsibility of training and certifying practitioners in the capital market, the Institute has always made it a cardinal responsibility to bring its rich intellectual resources to bear and serve as a strong advocacy platform to guide policy makers at all levels of government and the organised private sector.

He said stockbrokers have a common agenda to ensure the development of a strong and robust economy, especially from the perspective of the financial services sector.

The Chairperson  of the Conference Planning   Committee, Mrs. Lilian Olubi explained that this year’s conference was designed to address developmental issues that would move the market to the next level.

Olubi noted that regulatory approach to capital market architecture would formed  a vital part of discussion at the conference, saying a digital economy has been a key driver of growth in major developments markets across the world.

“ Digitisation of activities and transactions has helped to boost market depth, investor participation and seamless operations. In Nigeria, Fintechs are fast becoming a tool for pooling retail savings, executing similar technology to pool retail investments would help boost investor participation,” she said.

According to her, regardless of the outcome, it is apparent that the  focus would be on improving the Nigerian economy, thus we deem it fit to also  channel discussions what the focus should be after 2019 elections.”Olubi said.

The First  Vice President, CIS Mr.  Olatunde Amolegbe said the annual conference has remained a major platform where capital market regulators, top-level government functionaries and members of the organised private sectors discus issues that affect the economy and the way forward. The  Registrar and Chief Executive of CIS, Mr. Adedeji Ajadi explained that quite a lot of recent government’s policies had emanated from the previous conferences and the trend shall be sustained.