The Managing Director/Chief Executive of Arthur Steven Asset Management Limited, Olatunde Amolegbe, has made a compelling call on the Federal Government of Nigeria (FGN) to get more companies to list on the nation’s bourse.
Amolegbe made the call at a forum organized by the Capital Market Correspondents Association of Nigeria (CAMCAN) in Lagos with the theme: “Review of 2023 Market Performance and Outlook for 2024.”
He noted that listing of companies in which the government had direct or indirect holding as well as other firms doing business with government will boost capital market participation and revenue generation.
He further said listing such companies, like Dangote Refinery and NNPC Limited, would boost the capitalisation, deepen the Nigerian capital market, engender transparency and boost tax revenue in the country.
According to Amolegbe, unlike the over 50 per cent market capitalisation to Gross Domestic Product (GDP) as seen in many countries, Nigeria’s market capitalisation to GDP stands at 13 per cent.
“This is an indication that majority of the big companies in the country are not participating in the Nigerian capital market,” he said.
“I believe government needs to consider urging companies particularly those they have direct holding in and those that have huge business with government to list on the market.
“A lot of businesses are not listed on the exchange and they do business a lot with government; the more transparent the listing, the more tax revenue,” Amolegbe, former President of the Chartered Institute of Stockbrokers, said.
He warned that inflation would continue to soar and investor would remain wary of investing in the country until government decisively addresses the rising spate of insecurity.
In his words, “Insecurity is a major issue and government needs to work on it as it is disrupting supply chain and this contributing to the increase in inflation rate.
“Farmers are not unable to produce and the ones that can produce can’t get to market,” Amolegbe said.
“As long as the environment is seen as unstable, investors, both local and foreign will continue to be wary of investing, leading to a further decline in foreign exchange inflow,” Amolegbe said.
According to him, foreign exchange would be a significant contributor to where the capital market would be by the year end.
“If liquidity improves and price stables, organisations can better plan, if not, 2024 might be a dicey year for a lot of quoted companies,” he said.
Amolegbe listed the events that underpinned the market performance in 2023 as smooth transition of government, president’s inaugural speech, enactment of partial removal of subsidy, unification of foreign exchange and increasing monetary policy rate.
Recall that the market All-Share Index closed the year 2023 at 74,773.77 points while the market capitalisation stood d at N40.918 trillion.
Comment here