Expert Laments Nigeria’s 13% Market Cap-GDP Ratio, Tasks FG On Listing Of Govt, Large Companies

Caption: From left, Vice Chairman, Capital Market Correspondents Association of Nigeria (CAMCAN),  Mr Friday Ekeoba; Managing Director/Chief Executive of Arthur Steven Asset Management Limited, Mr Olatunde Amolegbe and Chairman CAMCAN, Chinyere Joel-Nwokeoma during the CAMCAN Review of 2023 Market Performance and Outlook for 2024 in Lagos on Tuesday.

The Managing Director/Chief Executive of Arthur Steven Asset Management Limited, Olatunde Amolegbe, on Tuesday urged on the Federal Government to encourage listings on the nation’s bourse to boost capital market participation and tax revenue generation.

This, it said, is particularly true of companies in which the government has direct or indirect holdings, as well as those that do business with government to engender transparency and boost tax revenue in the country.

Speaking in Lagos at the January forum of the Capital Market Correspondents Association of Nigeria (CAMCAN), with the theme: “Review of 2023 Market Performance and Outlook for 2024,” Amolegbe lamented the the nation’s market capitalisation to Gross Domestic Product (GDP) ratipo at a mere at 13%, compared to 50% in many countries.

This, he lamented, “is an indication that majority of the big companies in the country are not participating in the Nigerian capital market.”

Amolegbe,  former President of the Chartered Institute of Stockbrokers (CIS), noted that the capital market ensures transparency for listed companies said increased listing would further boost tax revenue for the government.

Therefore, he continued, “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, he added.

Expressing optimism on the listing of Dangote Refinery and NNPC Limited, he said both giants would boost the capitalisation of the Nigerian capital market, even as he charged the government on the rising spate of insecurity in the country.

Until the challenge is addressed, he stressed further, inflation would continue to soar and investor would remain wary of investing in the country.

“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.

“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.

He added that availability of 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.

On the 2023 market performance, he noted that the All-Share Index closed the year at 74,773.77 basis points, while market capitalisation closed at N40.918tr.

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.

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