Capital market operators in the Nigerian Stock Exchange (NSE) have expressed concerns over the shortage of new listings in the nation’s bourse since the 2009 global financial crisis.This is despite efforts by the Securities and Exchange Commission (SEC) to streamline the processes involved in the listing on the nation’s stock market for efficiency and cost effectiveness.
The operators, therefore, stressed the need for more collaborative efforts with public and private sectors’ stakeholders to advocate for market-friendly policies and infrastructure financing, as well as other capital requirements necessary for sustainable economic growth.
NSE had listed lesser number of companies into its daily official list in the last 10 years, even as a good number of listed entities have been delisted from the official list of NSE in the last few years.Listing refers to the company’s shares being on the register of stocks that are officially traded on the stock exchange.
A breakdown of NSE’s listing in 2009 showed Africa Alliance Insurance, Afromedia, AXA Mansard Insurance, Courteville Business Solutions, eTranzact International, Honeywell Flour Mills, McNichols and Portland Paints & Products.Multi-Trex Integrated Foods and NPF Micro Financial Bank were listed in 2010, while FBN Holdings and Stanbic IBTC Holdings listed in 2012, as United Capital, FCMB Groups, Infinity Trust Mortgage Bank and Tripple Gee & Company were admitted on NSE in 2013.
In 2014, Caverton Offshore Support Group was listed on the Exchange, as Transcorp Hotel was listed in 2015. While The Initiates came on NSE board in 2016, Global Spectrum Energy Services was listed in 2017, as Notore Chemicals Industries got listed in 2018. As at September 17, 2019, Airtel Africa, MTN Nigeria and Skyway Aviation Handling Company (SAHCO) are on the list.
Indeed, the NSE has witnessed poor patronage of new companies requesting listing in the last decade.The CEO of NSE, Oscar Onyema, had recently forum stated that the NSE has strengthened government engagement efforts on privatisation and listing of state-owned enterprises so as to take advantage of opportunities within this space during the year.
“To enhance our listing prospects, we have strengthened our government engagement efforts on privatisation and listing of state-owned enterprises, and we expect to take advantage of opportunities within this space during the year.”The Chief Relationship Officer at Foresight Securities Limited, Charles Fakrogba, said since the capital market is the barometer of the general economy, if the economy is doing very well, the market will not witness inflow of new companies coming to list on the exchange.
He added that the Nigerian capital market has done so well that it had provided a platform, an avenue for most companies to raise funds, citing the bank recapitalisation exercise in 2005 and 2006 where the Nigerian capital market provided the funds needed to enhance the process.He however noted that the harsh operating environment is hitting hard of Nigerian firms, just as the listed firms were not performing which is the reason for both voluntary and regulatory delisting from the market.
“In a nutshell, we have seen new entrance of companies, while some have delisted from the NSE in the last 10 years.“Looking at the listing so far this year, we have seen the likes of Telecommunication firms, MTN and Airtel coming to list, which show a good prospect for the market,” Fakrogba said.
The Managing Director of HighCap Securities Limited, David Adonri, noted that listing of new companies in the last 10 years have been low indeed, noting that the market had witnessed more companies delisting than new entrants in the last 10 years.He noted that investors confidence is still low especially in the primary market segment, noting that the ability to form capital has diminish in the market, which is also a major reason why companies delist on the NSE.
“The major oil companies in Nigeria should be compelled to list on daily official list of the exchange as they contributed largely to the nation’s GDP.”He called on government to induce the oil companies and other multinational companies by introducing tax holidays and other incentives such as government contracts to make listing attractive to them.