Magazine article New African

Bidding for Growth: The Nigerian Stock Exchange Has Ambitious Plans. under Its Chief Executive, Oscar Onyema (below) It Is Aiming for Nothing Less Than to Become the International Gateway to African Markets. Stephen Williams Reports

Magazine article New African

Bidding for Growth: The Nigerian Stock Exchange Has Ambitious Plans. under Its Chief Executive, Oscar Onyema (below) It Is Aiming for Nothing Less Than to Become the International Gateway to African Markets. Stephen Williams Reports

Article excerpt

THE CHALLENGE FOR OSCAR Onyema, who only took over the reins of the Nigeria Stock Exchange (NSE) in April last year, is to rebuild a modern institution that can serve investors and corporate organisations that are operating in the country, and those that will inevitably be attracted to invest in Nigeria. He is responding to the demand for product diversification; beginning a demutualisation process; and aiming to achieve a $1 trillion capitalisation target by 2016.

In its 2012 Africa Attractiveness Survey, the global accounting firm, Ernst & Young, confidently asserts that FDI flows to Nigeria will average $23bn a year for the next five years. That is significantly more than the anticipated FDI flows to South Africa and Angola combined (at $10bn and $7bn respectively) over the same period and affirms many economists' views that Nigeria is set to overtake South Africa as the continent's biggest economy within a decade. To meet the challenges, Onyema can draw on two decades of experience in the US where he worked both at the New York Mercantile Exchange and the American Stock Exchange. Essentially, one of his primary tasks now is to improve and deepen the NSE's liquidity, and he is already introducing a number of reforms and initiatives to do just that.

"One of the main barriers to achieving greater liquidity is restoring both issuer and investor confidence," he told New African in an exclusive interview during the African and Caribbean Business Experience 2 012 Expo (AACBE)--timed to coincide with the London 2012 Olympics. One of the first key initiatives that Onyema introduced last year was a segmentation exercise to analyse the key aspects of the market that were impeding growth. From this followed a strategic change to the NSE's company sector classifications and the introduction of market capitalisation and growth and income data for listed stocks. With fully electronic trading, clearance and settlement systems making for ultra-fast trading and settlement and a widely tracked all-share and sectorial indices, the exchange now has around five million registered shareholders, and that number is growing.

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Servicing the second biggest financial centre in sub-Saharan Africa, after Johan nesburg, the NSE currently has more than 200 listed companies--numbering several global brands--in a dozen diverse sectors including financial services, breweries, construction, ICT, and resources. While it is commonly asserted that the market is somewhat imbalanced as financial services dominate the exchange, it is also a fact that one stock, Dangote Cement, accounts for more than a fifth of the market's capitalisation. But Onyema deems this to be an opportune spur for the NSE to attract other highly capitalised companies.

When asked whether he would welcome legislation that would require the major telecom companies and the upstream oil and gas majors to list a tranche or all of their shares on the NSE, he responded by saying: "I think that all options should be on the table, but my preferred option would be to create an enabling environment, to have a package of incentives, and disincentives if you will, that are compelling enough for them to list.

"If you look at the history of the NSE, all the major spikes that have increased activity in the market have been driven by laws and legislation that have been imposed. The culture then is that people don't tend to access the capital market freely and willingly, but we are trying to change all that. We want to introduce value-added services, by making ourselves more attractive from a rules perspective--but for various reasons, we recognise that might not be enough--it might require legislation."

Indeed, one of the pieces of legislation that might directly have a bearing on the NSE is the hotly debated Petroleum Industry Bill (PIB). For Onyema, the implications are clear. "It [the PIB] will have a positive impact as it will create a new national oil company from the old NNPC which, within a few years, will have the opportunity to list on the market and unbundle the joint-venture agreements with the major international oil companies, allowing them to come to the market to raise capital. …

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