Unlike some of the markets in other climes, since the beginning of the economic meltdown in the mid 2008, the Nigerian capital market is yet to regain its confidence due to the loss suffered by the investors and the inability of the market regulators to proffer a lasting solution to restore the market to its past glory as a centre for the nation’s capital formation.
The question on the lip of investors has remained how to turn around this market. Several players in the market have highlighted the need to compel multinationals to be quoted on the Stock Exchange considering that this is the trend in some emerging markets.
However, following the weak condition of the local bourse, market operators believe the time is ripe for the Federal Government to heed the advice and toe the line of other countries who have enacted a compelling law for the listing of all multinational companies doing business in the country, noting that this is the only way to set in motion the necessary machinery required to turn around the market.
According to reports, in 2002, Kenya enacted the Foreign Investor Regulation, which compelled multinationals operating in the country to list on the capital market.
Similarly, Tanzania parliament in February 2010 passed a Communication Bill, which made it mandatory for mobile telecommunications companies to be listed on the Dares Salaam Stock Exchange.
In Kenya for instance, the?? legislation provided for a minimum of 25 per cent reserve of the issued share capital for local investors while the balance of 75 per cent was left for other categories of investors. The legislation made it possible for Kenyan citizens to invest in companies like Nation Media, a regional media player; TPS East Africa, a tourism operator and Safaricom, a mobile telecommunications company amongst others.
It is in the light of this and to save the equity market from eventual collapse that the Chairman, House of Representatives Committee on Capital Market and Institutions, Herman Hembe, is currently sponsoring a bill that would make it mandatory for the companies to be listed on the NSE.
The chairman in a press release in November 2011 said “it is in the light of all these that this committee has set out to partner all stakeholders and market operators to engender growth and diversification of the market so that it can be more reflective of our nation’s economy.
This House needs to lead the fray, and we will, in ensuring that growth is engendered via the capital market. Thus, it is incumbent on us to pass legislative reforms that would encourage designated sectors to list on f the Nigerian Stock Exchange. This will be through formal and contractual requirements to do so, supported by incentives, unbundling of stringent eligibility requirements that create high barriers for potential entrants and hinder participation by willing businesses, and adoption of options that promote foreign investment in our economy under terms that support our national interests.”
He noted that the committee will thus set out to get telecoms operators in Nigeria listed on the bourse of the Nigerian Stock Exchange which according to the committee, the sector, with a starting market of less than a million in 2000, now caters for over 90 million users.?
The committee further stated that it would also get the energy sector and its players listed on the bourse, adding that “it will partner with relevant stakeholders to speed up passage of the Petroleum Industry Bill to foster subsequent listing of major upstream players, the NNPC and all other operators in the oil and Gas sector.