Chairman, organising committee on national workshop of the Charter Institute of Stockbrokers (CIS), Alhaji Umaru Kwairanga, in this interview with OLUSHOLA BELLO, speaks on the Institute creating a platform in encouraging government to leverage on the capital market to finance this year’s budget deficit
What is your assessment of the Nigeria’s capital market from January to the present?
The capital market has been on a rebound in 2017, especially, from the end of the first quarter till now. Recent initiatives taken by the Central Bank of Nigeria (CBN) to solve the problem of chronic scarcity of foreign exchange (forex) has boosted the economy and the capital market in particular. The All Share Index (ASI) has swung into positive territory after months of persistent declines and trading volumes have increased dramatically in the last couple of months. I would say the Nigerian capital market has done quite well in the last couple of months.
How has the macro-economic instability typified by scarcity of forex affected trading on the NSE prior to the current relative stability?
The macro economic instability impacted trading on the NSE very badly. The index and market capitalisation were down by almost five per cent while the uncertainty lasted and trading volumes halved from previous years. As you know, participation in our capital market has been slightly skewed in favour of foreign portfolio investors for most of the past decade and this category of investors refused to participate in the Nigerian capital market while the forex issues persisted. I believe the drastic dip in liquidity of the Nigerian capital market was partly due to the refusal of this category of investors to play in the market while the macro economic issues were prevalent
What is your current assessment of investor confidence in the market?
Investor confidence is gradually returning as can be seen by the positive numbers in recent weeks. Our prayer is that the government, the Central Bank of Nigeria (CBN) and other regulators remain consistent in their resolve to tackle the issues that have held our economy and this great country’s potential down in recent years. That will definitely boost investor confidence further and guarantee stability.
The CIS is working round the clock to hold a national workshop on the theme ‘Transiting from Recession to a Global Power: A Working Template for Nigeria’. What informed this theme?
We chose the theme because we believe that what has happened in the last year is an aberration. Nigeria with its bountiful human and material resources and untapped opportunities should be on a consistent growth trajectory to taking its rightful place as a global power. Some mistakes were however made over the years especially in the last four decades that have consistently held back our potential.
Our belief as an institute is that with the right strategies in place and proper implementation, we can reset this country and fast track it to its rightful place in the comity of nations. We see the recession as a temporary blip and are confident that with the right template, we can attain our rightful status as a global power.
How can the theme benefit the economy in general and the capital market in particular?
The theme will elicit a viable working template that the managers of the economy can leverage on to drive growth in the country. We anticipate that speakers will come up with feasible and workable strategies for important organs of government and the private sector to implement in order to drive momentum in various sectors. This will benefit the economy, the citizenry and ultimately the capital market as the capital market is but a barometer of the economy. When an economy is vibrant and growing, the capital market will mirror this. If otherwise, the market will equally reflect the situation. I must be quick to add that our market is forward looking.
Could you shed light on some specific areas that speakers are expected to address?
We have the director-general of the Securities and Exchange Commission (SEC), Mounir Gwarzo who will be speaking on the capital market master plan and its contributions to national development to be supported by our capital market guru Mr. Tola Mobolurin, chairman, Capital Bancorp. We have also scheduled a session to discuss how an enabling environment can be created for public listing of the economy’s commanding heights such as the companies in the telecoms and upstream oil sectors.
What is the nexus between the workshop theme and the Economic Recovery and Growth Plan (ERGP) recently launched by the federal government?
The two are complimentary in that they both seek to proffer workable and practicable solutions to get the economy out of recession and back on the path of sustainable growth. The workshop will be practical and offer implementable strategies on a wide ranging variety of problems holding our economy back. It will therefore not be just another talk shop.
Are there critical issues that the government should address in order to utilise the capital market to fund the 2017 budget deficit?
I think the funding of government deficits is an ongoing issue and cannot be tied to the current year’s budget alone. The capital market exists to bridge the gap between investors who have funds to invest and users whether government or the private sector who need funds at any particular time. As long as the federal government puts in place policies and mechanisms to ensure prudence and accountability and offers competitive returns, the capital market will remain a viable option for funding its deficits.
What type of messages should the investing public be expecting from the national workshop?
Investors should expect positive messages on growth in both the economy and the capital market. They should expect to hear about some of the laudable strategies being crafted to get the economy out of recession and better their lot.
In specific terms, what have been the roles of the CIS in building investor confidence in the market?
CIS has been very proactive in ensuring that members of the Institute attain and maintain the highest standards in terms of professionalism, knowledge and character. Any investor dealing with a licenced member of the Institute is assured that he or she is dealing with a professional who knows his onions and who will always abide by the highest standards of integrity. At the same time CIS is also waging a relentless war against quackery in the profession to ensure that investors in the Nigeria’s market are protected at all times.
How would you advise investors?
My advice has always been that investors should make investing a regular habit, invest after thorough research and more importantly seek the opinion of a professional stock broker. Keep an eye on your investments and the fundamentals of the companies you invest in. Buy low, sell high. Our stock market has growth potentials as many stocks are still trading below their intrinsic values. This is a good time to move in.