SECTIONS
African Capital Markets: Challenges and Opportunities

NIGERIA

Dave Uduanu, CFA
CEO, Sigma Pensions Limited, Nigeria

Nigeria’s economy was transformed post-independence with the adoption of an International Monetary Fund (IMF) program in 1986, which kickstarted liberalisation of the economy. The repeal of indigenisation decrees and exchange controls, as well as privatisation of public corporations, induced a wave of stock market listings in the 1990s. Policy initiatives, such as pension reforms, consolidation of the banking sector, and the creation of a debt management office, produced large domestic institutional savings pools. 
Despite these advancements, the Nigerian Stock Exchange (NSE) market remains small, with a market cap/GDP ratio of just 9%. Its 169 stocks are concentrated in three sectors: banking (33% of market cap), materials (32%), and consumer goods (27%). But these sectors together account for less than 10% of economic activity. One reason for the poor economic representation of the NSE is the informal nature of key sectors of the economy, such as agriculture (21% of GDP), construction and real estate, and trade. 
In a bid to restore confidence and solve the problem of thin domestic capital pools, the NSE has partnered with the London Stock Exchange (LSE) to allow dual listing of Nigerian-based entities on the LSE. The recent listing of two telecommunications giants in Nigeria and a growing enthusiasm among pension providers for equities are signs that the NSE may soon be punching its weight.

NIGERIA

Do you know....?

YOU'RE RIGHT!

Answer: Bonds. The first Nigerian bond was listed in 1946. Trading on the Nigerian Stock Exchange didn’t begin until 1961 (with three equities listed).

VERY CLOSE!

Answer: Bonds. The first Nigerian bond was listed in 1946. Trading on the Nigerian Stock Exchange didn’t begin until 1961 (with three equities listed).