Economic Growth: Demutualisation of NSE To Resuscitate Dead Capital – APT

By Barnabas Esiet

As the demutualisation process of the Nigerian Stock Exchange (NSE) nears completion, the Managing Director of APT Securities and Funds Limited, Garba Kurfi, says the exercise would boost economic activities and reactivate idle capital in the market.

The Nigerian bourse earlier announced that it would convene a mandatory Court Ordered Meeting (COM) of its members to pass requisite resolutions for the demutualisation of the Exchange on March 3, 2020.

Demutualization is the process by which a customer-owned mutual organization changes legal structure to form a joint stock company that can make profit.

At a forum organised in Lagos by the Capital Market Correspondents Association of Nigeria (CAMCAN), Kurfi noted that demutualisation of the exchange would reactivate idle capital in the market, thereby boosting economic activities.

A cross section of CAMCAN members at the forum.

He believes that demutualisation would bring a paradigm shift to drive more growth for the nation’s economy.

“It is a good thing and all of us are going to be happy at the end of the day because it is going to unlock more capital for the market.” He said.

“For instance if I place shares as collateral, I can trade and make money, we are pleased this is coming after so much delay, this will change the economy’s perspective as well.” Kurfi added.

He argued that even though the performance of the market in 2019 was not encouraging, it is expected to close in double digits by the end of 2020 as both the technical and fundamental analyses have pointed to the positive direction.

“However the market may experience volatility because of the changes in the reporting standard as adopted by the exchange without adequate awareness of the brokers.” He noted.

“Also, I foresee banks unlikely to make profits like they did in 2019 because they are pressured by the Central Bank of Nigeria to comply with the 65 per cent loan to deposit ratio .”,Kurfi added.

According to him, the restriction in Open Market Operation and increase of Cash Reverse Ratio by 500 basis points to 27.50 per cent would redirect funds into the stock market and impact positively on the sector.

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