The Nation Newspaper

Tag: MARKET

  • Can we bank on Nigerian bond market?

    Can we bank on Nigerian bond market?

    The Nigerian bond market hitherto an exclusive preserve of blue-chip companies have since become a fad among the different tiers of government who see it as a veritable source of income to drive development projects. In this report, Bukola Afolabi takes a look at the fortunes of the nation’s bond market vis-à-vis challenges of sustaining capital

    Time was when the bond market was strictly an exclusive market. But not anymore. Today, it has become the beautiful bride sought after by everybody who is anybody, especially the different tiers of government. And the reason for this is not far to seek: the realization that the bond market is perhaps one of the easiest means of raising funds out there with little or no encumbrances at all.

    The game changer

    Following the reforms in the bonds market, the Federal Government in October 2003 issued three-year, five-year, seven year and 10- year bonds. While the three year bonds were 87.5 per cent oversubscribed and allotted, investors showed apathy towards the longer tenured bonds.

    The low turnout for the other bonds resulted in subscription and allotment of less than 50 per cent of the issue. No bonds were issued in 2004. Following investors’ aversion for the long tenured bonds, the government offered only two and three-year bonds on seven separate dates in 2005, raising a modest N178 billion from investors at yields between 8.25 per cent and 17 per cent.

    In 2006, the Federal Government was able to raise N282 billion from the three-year, five-year, seven year bonds. The amount raised was 58 per cent above amount raised in the prior year, while subscription was N613 million. From then onwards, the bond market has grown rapidly, with the Federal Government beginning a tradition of monthly issuance of bonds.

    In 2006, for the first time since the re-opening of the market, special purpose bonds were issued to selected banks for the settlement of N75 billion pension arrears in 2006

    According to Ms. Arunma Oteh, Director-General of Nigeria’s Securities & Exchange Commission (SEC), “interest in (Nigeria’s) bond market is not limited to local issuers as the reformed environment is attracting interest from multilateral financial institutions such as the IFC (International Finance Corporation) and the ADB (African Development Bank).”

    Addressing participants on “recent reforms in the Nigerian bond market,” at a seminar organised by the Capital Market Correspondents Association of Nigeria (CAMCAN) in Badagry, Lagos, Oteh said: “the ADB has also filed for an MTN (Medium Term Note) programme of about $1.5 billion to be denominated in the local currency.”

    She recalled “that the IFC issued its maiden ‘Naija Bond’ in February last year and has already approached us for a medium term note (MTN) programme to be naira-denominated worth about $1 billion.”Both programmes will be free from the eliminated limitation on the lifespan of a shelf programme,” she assured.

    “You may also recall that we approved two new trading platforms, both over-the-counter (OTC), i.e. the National Securities Dealers Association (NASD) platform and the Financial Markets Dealers Association platform, the FMDQ. The former, which was launched recently has already started operations and is expected to revolutionise the entire bond market by boosting liquidity and simplifying bond trading.

    “The Nigerian bond market is certainly on the verge of a revolution buoyed by an improved, competitive and conducive environment that attracts issuers and investors alike. The yield curve of the FGN bonds which has been extended to 20 years provides a good benchmark for issuers of all stripes to leverage the bond market to attract capital, both foreign and local. The market will continue to attract significant amounts of capital internationally since the FGN bond attracted inclusion into the emerging markets indices of Barclays and JP Morgan,” Oteh stressed.

    Continuing, she said the result of these initiatives have been encouraging, as can be seen from the upswing in the domestic bond market, resulting in current total capitalisation of about N5.65 trillion.

    What is more noteworthy, she continued, “is the increasing interest in the bond market by corporates and State Governments.”

    State government bond

    In its annual National Debt Sustainability Analysis (DSA) released by the DMO last year, the total domestic debt of the 36 states and the Federal Capital Territory (FCT) reached N1.471 trillion last year. This is an increase of 19.34 per cent compared with the N1.233 trillion domestic debt figures the previous year.

    The figure indicates an abuse of the opportunity that the bond market provides reported recently that only sixteen states of the federation have raised bonds totalling N520 billion in the last six years without clear outlines on how the funds were used.

    This is against the backdrop of massive unemployment and infrastructural deficit across the country, which the debts could have addressed.

    Specifically, the 16 state governments were found to have raised the bonds without their citizens’ understanding of what the funds are meant for.

    Filings by the state governments at the NSE showed that Kogi state’s N5 billion bond is the smallest so far while Lagos emerged the biggest debtor with a total of N187 billion issued so far.

    Analysis of numbers obtained showed that Osun state with internal generated revenue and federal allocation of less than N2 billion has so far raised N30 billion including the just concluded N11.4 billion sukuk.

    Others include: Kwara N17 billion, Niger N15 billion, Kaduna N8.5 billion, Gombe N20 billion and Edo N25 billion.

    Benue, Ebonyi state Ondo state, Ekiti state, Bayelsa state, Imo state and Delta state have also raised N13 billion, N16.5 billion, N27 billion, N25 billion N50 billion, N18.5 billion and N50 billion respectively.

    Investigation by The Nation also revealed that Oyo, Ekiti, Zamfara, Rivers and Adamawa states respectively have concluded arrangements to head to the stock market to have a taste of the binge findings also revealed that the states activities at the bond market have crowded out corporates, particularly the manufacturing sector thus inhibiting their ability to create value and employment.

    Although safety of the funds is paramount, experts believe that pension funds administrators (PFAs) should do more than rely mainly on state and federal government bonds to invest pension contributions.

    The PFAs held bonds totalling N1.9 trillion at the end of March, equivalent to 45 per cent of their assets under management and 42 per cent of the outstanding stock of debt instruments.

    The project of the state government

    The number of listed state governments bonds currently being auctioned at the Nigerian Stock Exchange (NSE) has risen to 35, with a total market value of N565 billion. The above amount was raised between 1978 and 2013 from the capital market to finance various developmental projects.

    The Nigerian bond market has provided N565 billion to 18 states to finance various infrastructure projects in the last 35 years, 75 per cent of the funds were raised in the last five years. In the last two years, four state governments had raised funds through the bond market to finance various developmental projects.

    Leading the pack in terms of volume and value is Lagos State, which got approval to raise N167.80 billion from the capital market but has so far raised N80 billion in 2012 to finance construction of Adiyan Waterworks (Phase II), infrastructure developments, health facilities and redevelopment of Eric Moore Schools.

    On December 31, 2013, Ekiti State Government concluded its N25 billion bond issuance programme with the successful raising of the balance of N5 billion from the exchange. Ekiti State had in 2012 embarked on the bond issuance programme raising N20 billion as the first tranche with a coupon of 14.5 per cent to fast-track its infrastructural development and economic transformation.

    Having begun the execution of the various projects, Ekiti State returned to the market to raise the remaining N5 billion with a coupon of 14.5 per cent to complete the projects. Earlier in 2012, Ondo State Government under the 50 Billion Debt Issuance Programme issued N27 billion bond to finance developmental projects.

    It was followed by Gombe State in the same year which raised the sum of N20 billion to finance the building of township and regional roads, schools, purchase of earth moving equipment, mega park, School of Nursing and refinancing of existing loan while Osun State got approval to raise N60 billion from the capital market.

    But has so far raised N30 billion in 2012 and N17.4 billion in 2013 under its Tranche 1 and 11 to finance road infrastructures, commercial infrastructure, urban renewal, Ede waterworks and refinancing of loan while the second Tranche will be used to finance education.

    Recently, Director General of Securities and Exchange Commission (SEC), Ms Arunma Otteh said while the state governments have benefitted significantly from the market, the federal government had also been an active participant in both the domestic and international bond markets.

    More disciplined funding

    Also, Director-General of the Debt Management Office (DMO), Dr. Abraham Nwankwo noted that his agency is busier now and has helped by its enabling law ensured Federal Government is now more accountable for its spending. In the days before the advent of the office, he explained further, government funded its deficit budgetary expenses through ways and means, in which case more currency is printed to fund the shortfall in the annual budget. This was particularly the case, he recalled, during the military era and in the years immediately preceding the DMO’s birth.

    Speaking on “the transformation of the Nigerian bond market,” Nwankwo , who was represented by Joseph Ugwuala, head, Policy, Strategy and Risk Management at the office, said between 2003 and this year, Abuja has funded N4.612 trillion or 57.74 per cent of total deficit of N7.986 trillion arising from fiscal operations through bonds issuance at the domestic market.

    Giving a breakdown of the figure, showing that in 2003, fiscal deficit stood at N202.72 billion, representing 2.04 per cent of the nation’s Gross Domestic Products; dropping in 2004 to N172.6 billion or 1.51 per cent of GDP. By 2005, national deficit level fell again to N161.86 billion or 1.11 per cent of GDP; before beginning soaring to N341.86 billion or 2.35 per cent of GDP, and representing a 111.79 per cent jump. The deficit level jumped again to N580.19 billion or 3.64 per cent; and then N537.95 billion or 0.84 per cent in 2008. In 2009, deficit was N836.6 billion, 3.02 per cent of GDP. The figure more than doubled once more as government’s revenue obviously stagnated as needs mounted, Federal Government’s fiscal operations resulted in a 2010 deficit of N1.993 trillion or 6.11 per cent of GDP, the highest within the 10-year period. It dropped to N1.136 trillion or 2.96 per cent in the following year; and N1.135 trillion or 2.85 per cent in 2012. Last year’s deficit is forecast to reduce below the trillion Naira mark at N887.06 billion or 1.85 per cent of GDP.

    He noted that in 2003 at the onset of the bond market, N72.75 billion of the deficit or 36 per cent was funded by domestic borrowing, dropping to N27 billion or 16 per cent the following year; and N25 billion or 15 per cent by 2005, In 2006, the figure rose to N1087.2 billion or 31 per cent; rising further to N200 billion or 34 per cent in 2007; a dropping to N155.47 billion or 29 per cent in 2008. In 2009, the quantum of the deficit funded through the domestic bond market ballooned to N542.11 billion or 63 per cent, a level from which it has never dropped. In 2010, domestic funding of deficit catapulted further to N1.36 trillion or 68 per cent; falling to N852 billion or 75 per cent the following year; last year, N744.44 billion or 65 per cent of the federal deficit was funding domestically; while N544.06 billion or 61.33 per cent of this year’s deficit is to be sourced from the domestic bond market.

    According to Nwankwo, “the current practice of financing part of the country’s fiscal deficits by borrowing from the market has not only led to the development of the domestic debt market, it has brought other salutary benefits for monetary policy operations and the economy.”

    These, he continued, include “removal of conflict of interest – clear separation of debt management functions from monetary policy operations – thereby allowing each agency, especially the CBN, to concentrate on its core mandate; subjecting government’s borrowing to market discipline; use of long-term as against short-term funds to finance long-term projects – a clear case of optimal asset-matching; significant reduction in refinancing risks through tenor elongation.”

    One other benefit, he added, was the “establishment of a Sovereign Yield Curve and benchmark for private sector borrowing.”

    The domestic bond market, according to the DMO boss, has not been just for financing government’s fiscal deficits, as it served as a platform for issuance of the Asset Management Corporation of Nigeria (AMCON) bonds to buy toxic debts off the balance sheets of Nigeria banks. Proceeds of the domestic bond issuance, he noted, were also used to fund special government stimulus spending initiatives like the N200 billion commercial agriculture programme, whereby the funds raised by the DMO were made available to the CBN for lending to agriculture enterprises through the commercial banks between 2008 and 2010. Also, proceeds from the issue was used to fund the cotton, textile and garments revitalisation programme, part funding to the tune of N100 billion with FGN bond proceeds. Others include “the purchase of locomotives for the revitalisation of rail transportation; and, the provision of seed money for the development of infrastructure in new districts in the Federal Capital Territory.”

  • Ladipo motor spare parts market goes online

    The Ladipo international motor spare parts market has opened an online portal where clients who are too busy to come to the market can purchase their genuine motor spare parts online and have it shipped to them.

    This development was disclosed by the Chairman, Aguiyi Ironsi International Trade Center, Mr. Ajibade Olajoku who said the activities of fraudulent middle men necessitated the new move. He revealed the website as : www.youseeam.com.

    According to Olajoku, there is a network of partners who will supply customers with brand new products which would eliminate the need for middle men. He said the association operates from warehouse B, in the Aguiyi Ironsi International Market where trained artisans are on hand to deliver quality service to their online customers.

    Olajoku: “ We have an internal mechanism to ascertain the products, the new ones have warrantee of one year, while the tokunbo gave guarantee of 30 days. It eliminates the rigour of coming down physically to an organized market.”

    He said the Association is determined to eliminate the middle men who specialize in frustrating the customers. “With www.youseeam.com, we are online for 24 hours. We have engine parts and other car accessories. Though we operate within Ladipo market, we have enough delivery vehicles to satisfy our customers.”

  • NSE steps up surveillance as cyber fraudsters target stock market

    The Nigerian Stock Exchange (NSE) has issued a red alert on increasing cyber frauds and scam attempts specifically targeted at the stock market as the Exchange step up its surveillance to protect investors and operators.

    In a circular to market operators, the NSE stated that it has observed increasing trend of cyber fraud and scam mails being sent by fraudsters and impersonators to stockbroking firms.

    As part of the measures to checkmate the rising trend of cyber frauds, the NSE said that stockbrokers must ensure compliance with the market standards on identity fraud management and enhanced customer due diligence, otherwise known as “Know Your Client” (KYC).

    In the circular signed by NSE’s Head, Broker Dealer Regulation, Mr. Olufemi Shobanjo, the Exchange underscored the importance of customer due diligence and immediate report of any suspicious transaction or message to the market’s regulators and the law enforcement agencies.

    “The Exchange has observed an increasing trend of cyber fraud and scam mail sent by fraudsters and impersonators to dealing member firms. Dealing members are advised to confirm all client orders or mandates made by fax, telephone (voice or text) or electronic email before execution,” the circular stated.

    According to the NSE, stockbrokers and other operators must also ensure compliance with existing rules by conducting proper KYC on all clients and report suspicious transactions.

    The Exchange has mulled new policies to tighten the KYC framework in the stock market and stem investors-related frauds.  These included the policies on biometric identification and direct payment of cash to investors.

    Under the biometric identification, individual and institutional investors would have to submit for biometric identification before they could buy or sell shares at the Nigerian stock market.

    A copy of amendments to rules governing operations and operators at the stock market showed that all stockbrokers will now be required to obtain the biometrics of all their clients in a new rule being proposed by the NSE.

    In what may have far-reaching implication at the market, NSE indicated biometric identifiers to be obtained “shall include finger prints and iris recognition and the information collected shall be applied towards confirming clients’ identities”.

    While individual investors will have to provide biometrics on every account, corporate entities will provide corporate information as well as biometrics of the authorized signatories to their share trading accounts.

    “No Dealing Member shall open, accept and/or operate a share trading account or otherwise deal in any manner whatsoever, on behalf of any person or entity unless the biometrics of such person or authorised signatories of the entity have been collected by the firm,” the new rules stated.

    According to the proposed rules, any stockbroker that fails to obtain the biometrics of its clients and obtain adequate know-your-client documentation from its clients shall be suspended from trading forthwith until regularisation is effected.

    Under the direct cash policy, net proceeds of stock market transactions would be sent directly to bank accounts of investors through the Central Securities and Clearing System (CSCS, the clearing and settlement gateway of the market.

    As against the general practice whereby the payments for investors’ transactions go into the accounts of the brokers for onward disbursement to their clients, the general practice under the ‘direct cash settlement’ will be to send the net proceeds direct from the clearing and settlement system straight to the investors’ accounts while the existing practice of payment through brokers will become exceptional cases.

    The NSE has already advanced on the framework for the new direct cash payment system, with the rules setting out the framework currently undergoing review for final draft and approval by the Securities and Exchange Commission (SEC).

    According to the new rules, brokers are mandated to provide their clients’ bank account details to the CSCS, being the agent of the Exchange for the clearing and settlement of all securities traded on the Automated Trading System (ATS) of the NSE.

    Settlement of each trade carried out on the ATS shall then be done by direct payment into the client’s account as provided to the CSCS.

    Under the proposed framework, brokers are mandated within three working days of receiving instructions from a client that settlement should be done by direct payment into such client’s account to notify the CSCS of the client’s instructions and provide the client’s account details to the CSCS.

    Any broker-dealer that fails to notify and provide the account details within the three-day timeline will be liable to a fine of N250,000 in addition to any other penalty which the Exchange may impose, according to the new rules.

    However, a client that declines direct cash payment into its account provided to the CSCS shall notify the CSCS by completing a direct cash settlement notification form, specially made for that purpose.

    Also, settlement of transactions carried out on behalf of any client whose account details are not provided to the CSCS shall be done by payment into the account of the client’s broker-dealer firm.

     

     

     

     

     

     

     

  • Dutse Market: Traders lament demolition

    Dutse Market: Traders lament demolition

    Dutse Market has always been famous, not just because of its proximity to the Kubwa Expressway, or that  it is the largest market in Dutse. It is famous mostly because of the human and vehicular traffic.

    Most residents of Gwarimpa, Galadima, Kubwa, Dei Dei, Zuba, Suleja and their environs will testify to the level of traffic which, most times, can spill as far as the expressway. Despite the inconveniences which residents experience because of the market, it is of much importance to them.

    After the demolition exercise that took place in some parts of Dutse last year, during which some illegal structures were demolished, the rumour had been making the rounds about an imminent demolition of the market. People, especially traders, hoped that it would remain just a rumour.

    However, that rumour became a reality. According to the traders, they woke up one day a few weeks back to the reality that their shops were being demolished by bulldozers.

    Some traders claimed that they never had any hint about the demolition.Some claimed they heard about it but thought it would not happen.

    The area council insisted that the traders were notified through every means possible, adding that series of meetings were held by all stakeholders. The council added that it would have demolished the market since last year but it continued to give the traders some grace periods.

    Even though the administration had provided a temporary space for the traders beside the demolished market to continue their trade, most of them have refused to make use of the temporary place provided. Rather, they turned the newly constructed fence into stands for their numerous wares.

    Some insisted that the new site was not convenient for them as their customers will find it difficult locating them.

    Michael Obi, a clothe merchant told our correspondent that he had to make alternative arrangement through which he would take care of his family since he no longer has a shop.

    He said: “See, one thing with buying and selling is the ability of a customer to reach you and buy it from you.

    “How can I agree to go to a corner where my customers will not be able to locate me? The important thing is to make sales and hiding in the temporary site that they gave to us will not do the job. I have a family to take care of and I will not be alive and watch my children starve.”

    Madam Stella, who sells plantain by the road side said: “I am not affected by the demolition because it’s not as if I had a shop before the demolition. The only problem now is that all those people that used to have shops are now dragging the space with us outside here. They are now bringing their goods and displaying them where people like us used to stay.

    In a chat with our correspondent, the Chairman, Shop Owners’ Association Dutse Market, David Okuawo said: “The area council sold an empty land to us. We built structures on it. That is the right we have to be shop owners. They gave us allocation letters and we have been paying levies and dues to the area council.

    “For some of us, there was an agreement where ownership was to expire after 15/25 years respectively, while some of the certificates have life durations and have not expired. We have all these information.”

    Continuing, he said: “We are the landlords and should be the ones that the area council should address directly. But they had series of meetings with the traders who are our tenants about the proposed demolition. When we realised what was going on, we took the matter to court and they were restrained from demolishing the market until we had come to a suitable agreement. But they simply went ahead and demolished the market.”

    Reacting to the allegation, Chairman Bwari Area Council, Hon. Peter Yohanna Ushafa insisted that his administration did not disobey any court injunction restraining them from demolishing the market, saying they had been meeting with all the stakeholders for several months before the demolition was carried out.

    Ushafa said: “Nobody is above the law. There is no way that the court will restrain me from doing anything and I go ahead and do it because I know that I must obey the rule of law. But the reality is that, if they say they were not aware of the demolition then they are not fair to themselves.

    “We have had series of meetings with the Dutse Alhaji Market Traders’ Association, Shop Owners’ Association and others. In our meetings, we agreed that the market should be demolished in September last year. But we considered the fact that Christmas was approaching and would be the peak of business; we decided not to bring the market down.

    “We invited them to my house recently and they were even asking that it should be done phase by phase. But I told them that it was not going to be possible because paying for the excavation of the market in phases will be more expensive. So, to avoid the cost, I told them that it will have to be done at ones. I told them to move to the alternative place beside the market. Even if I continued to meet with them on the issue for the next 10 years, they will still complain.

    “We have told them that if you have a shop in the market that is being pulled down, when the building is completed; you will come over and pick a form. Although the form is N10,000, you will take it for free. All you need is to present the former allocation paper and we will tell you what you are going to pay.

    “The traffic situation around the market will now end when the market is completed. This is because the market will be fenced and people will not come out of it to sell.

    Continuing, he said: “When the shop owners were given lands to build, they were given papers which include the number of years of tenancy. Have they not exhausted the number of years agreed on? I know that in the letter it was indicated 15 years and that market is more than 15years old; so the time agreed on had elapsed.

    “We are still looking at them like partners because the market has brought a lot of progress to Bwari. So, we feel like we are one. We want to ensure that Bwari develops and meets with the standards of the satellite towns so that those living within Bwari will be happy, even as more people can come and live in Bwari.”

    So far, work had begun on the new Dutse Alhaji Market. Hopefully, it will meet international standard.

  • Oyo blames PDP chieftain for market crisis

    Oyo blames PDP chieftain for market crisis

    Oyo State government has accused a leading Peoples Democratic Party (PDP) chieftain of coordinating renegades among Temidire Plank Market sellers against the administration.

    The government said the aim of the PDP chieftain was to cause disaffection between government and the people.

    The Special Adviser on Media to the Governor, Dr. Festus Adedayo, made this known in a statement in reaction to allegation that a government agency dispersed some of the renegades from the market.

    The government had acquired the market some years ago and relocated the traders to the Fashade area of the state capital.

    But this decision had generated bad blood between it and some members of the market who insisted that they would not move out of the market.

    “It is apparent that the said PDP stalwart is doing this for an ulterior motive. He coordinates dissent against government at the market and is their arrowhead. In fuelling the renegades, he apparently hopes to score cheap political points and paint government in bad light.

    “The market construction has been delayed for too long because of this prolonged, fuelled antagonism against government. Government considers the interest of the people first and not the narrow interest of politicians who are sponsoring the dissent,” said the statement.

    The government said it had done everything humanly possible to advance the cause of building a befitting market for the people of Temidire but its efforts were frustrated by a cabal, whose actions were fuelled by a political undertone.

    It said it had in the last one year met leaders of the market several times, provided an alternative market for the plank sellers at the Fashade village, with all conveniences, including transformers.

     

  • Ajimobi pledges to assist market fire victims

    Ajimobi pledges to assist market fire victims

    Oyo State Governor Abiola Ajimobi has pledged to assist victims of the Alesinloye market fire disaster within one week.

    The governor, who visited the burnt market in Ibadan twice in one day, made the pledge while inspecting its damage last Saturday.

    His first visit was at 2a.m on Saturday and later in the day to identify with the affected traders.

    Ajimobi expressed sympathy with the traders, describing the fire incident, which destroyed over 500 shops, as “very unfortunate.”

    He pledged that the government would provide succour for the victims.

    The governor recalled his experience when his Lagos private residence was razed in 1993.

    He prayed that God, who assisted him to overcome the incident, would also compensate the traders.

    He directed the affected traders to form a committee to meet with government representatives.

    The governor urged the leadership of the market to ensure equitable distribution of whatever assistance the government would offer.

    He pleaded that such assistance should not be politicised.

  • Ohanaeze inspects N16b international market

    The Lagos State chapter of the apex Igbo social-cultural organisation, Ohanaeze Ndigbo has visited the proposed site of the Heartland Gateway International Market located at Mgbidi in Oru East Local Government Area of Imo State.

    The visit, according to the group, was part of efforts initiated by the leadership of the organisation to encourage Ndigbo to invest at home and boost the economies of their respective states.

    Addressing the members of the organisation numbering over 200 at the residence of the Deputy Speaker of the State House of Assembly, Donatus Ozoemena, the CEO of Graceland Channels Limited, Pastor Nat Omoruyi, revealed that plans are underway to acquire more parcels of land to complement the already 28,097 hectres already acquired for the market.

    Omoruyi further said that the Mgbidi community has already expressed their readiness to donate more of their lands in order to accommodate the 50,000 shops planned for construction on the site, which, he added, will cost N16 billion. The market is expected to yield a daily N500 million trade transaction.

    He also revealed that the Federal Government had already awarded the contract for the dredging of the Oguta Lake which is very close to the market from Imo State axis to Rivers State axis of the lake.

    Expressing gratitude to the people of the community for donating their lands for the project, Chairman Market Committee of Ohanaeze Ndigbo Lagos State, Chief Vitus Chukwudebem Uzoh, said the market, when completed, will afford Ndigbo the opportunity to invest in their respective states without fear of molestation.

    Uzoh described Ndigbo as industrious people who contribute to the development of any area wherever they find themselves. He cited the Tejuosho and ASPAMDA markets in Lagos as examples.

    He said: “Ndigbo are blessed in trade and business. We have contributed significantly in building all the major markets across the country and beyond. Now we are going to invest in own land, where we will not be harassed or intimidated by any other tribe.”

  • CIS pushes for broader market regulation

    The Chartered Institute of Stockbrokers (CIS) would work with other stakeholders in the capital market, the National Assembly and the Presidency to ensure the passage of a new bill that seeks to broaden the scope of certification of the CIS through the creation of the Chartered Institute of Securities and Investment (CISI).

    The CISI bill, which is being sponsored by former Chairman of the Senate Committee on Capital Market, Senator Ganiyu Solomon, intends to replace the law that set up CIS and bring other capital market operators under the supervision of CISI.

    Mr. Albert Okumagba, the new president of the CIS who was formally inaugurated on Monday, has made the CISI as a cardinal point of his administration.

    Okumagba said the CIS would engage the National Assembly and the Presidency to ensure that the CISI bill is passed before the end of this year.

    In a memorandum to the Senate Committee on Capital Markets on the CISI Bill, the Nigerian Stock Exchange (NSE) had stated that the CISI Bill would foster greater collaborative and proactive engagement with regulators, trade bodies, financial services firms, academic institutions and expert advisers and truly reflect the emerging nature of the Nigerian capital market beyond the restrictive definitions of buying and selling of stocks.

    According to the NSE, the CISI Bill is in line with the practice in other leading markets including United Kingdom (UK), South Africa and United States of America (USA).

    The NSE outlined that the objective of its memorandum was to enable the legislators to make an informed decision that would positively affect capital market stakeholders at a critical time in the recovery of the capital markets.

    The NSE noted that the CISI Bill would upgrade Nigeria’s CIS to similar bodies like the Chartered Institute for Securities and Investment (CISI) in the UK, the South African Institute of Security (SAIS) in South Africa and the Financial Industry Regulatory Authority (FINRA) in the USA, broadening the scope of participation and knowledge in the Nigerian capital market.

    The CISI Bill 2013 is based on the model of the CISI UK, the largest and most widely respected professional body for professionals in the securities and investment industry in the UK and in a growing number of financial centers globally. The SAIS was established in Johannesburg in 1978 and it is responsible for drawing up the original training standards for the securities industry. SAIS aims at promoting individual professional competence and to support the maintenance and enhancement of this competence by securities professionals. This model is also similar to the proposals in the CISI Bill. The FINRA, a successor to the National Association of Securities Dealers Inc. (NASD), is a private corporation that acts as a self-regulatory organization (SRO) FINRA is a non-governmental organization that performs financial regulation of member brokerage firms and exchange markets. FINRA also regulates the activities of professionals in the securities markets as well as administers the certification for participating in the US financial markets.

    According to the NSE, the proposed CISI Bill modernizes and broadens the scope of operations of the CIS to include securities and investments and its objectives include ensuring adequate knowledge and discipline in the market.

    “The CISI Bill seeks to adhere to international standards as illustrated in capital market activities in other jurisdictions. It will ensure that the Nigerian capital market meets up to the set benchmark and remains one of the leading financial centres in the African region in line with the transformation of the Nigerian capital market and wider economy,” the NSE stated.

    The Exchange noted that the passage of the CISI Bill will ensure a higher degree of professionalism in the financial services industry and encourage members to maintain and develop their knowledge and skills to promote higher standards of ethics and integrity in the securities and investment industry.

    According to the NSE, there is need for a broader version of the institute of stockbrokers as this will allow for broader participation of other players in the capital market as the Nigerian capital market has evolved beyond buying and selling of stocks and it now includes fixed income trading, Exchange Traded Funds and other securities.

    It pointed out that as part of the effort to deepen and develop the Nigerian capital market other financial instruments will be introduced to the market imminently which will require participation from other financial services professionals such as treasury bond dealers in the over-the-counter (OTC) market amongst other securities.

    “The current CIS structure has become redundant as it is restricted to only stockbrokers and does not accommodate other financial market professionals. The CISI Bill incorporates these professionals so they can also participate and contribute their quota to the development of the Nigerian capital market,” the NSE stated.

    The Exchange however called for broader consultation with all other major capital market stakeholders that will fall under the jurisdiction of the bill as well as a guarantee of the NSE position on the governing council of CISI as contained under the CIS 2004 Act.

    It also noted the need for the scope of the CISI bill to be adequately defined and articulated such that the regulatory functions and powers of the new institute would be clearly defined.

  • Rising inflation will not hurt equities market, says Rewane

    Rising inflation may not significantly influence the performance of the Nigerian stock market, managing director, Financial Derivatives Company (FDC), Mr Bismarck Rewane has said.

    Many analysts expected the inflation rate to rise in the next computation. Rewane’s FDC has predicted that inflation rate will likely increase marginally again to 8.3 per cent.

    According to FDC, the inflation forecast was based on the regression model of its analysts. If this forecast increase in inflation takes place, it will be the fifth monthly consecutive increase in the price level this year.

    In its latest economic bulletin, FDC said the projection of a further increase in the headline inflation figure would not hurt investors’ confidence in the equities market.

    According to the report, investor confidence in the stock market will remain unchanged because the status quo on monetary policy has not influenced a significant movement in the fixed income market.

    The report pointed out that the current investors’ sentiment and profit-taking transactions are possible incentives to drive the stock market performance in the near term.

    “The stock market in 2014 has only gained 1.65 per cent. In spite of earnings growth decline, the price earnings ratio has declined to 29.56 times from as high as 31 times. This means that there are a few bargains out there. The inflation numbers are unlikely to scare yield hungry investors from bargain hunting,” FDC stated.

    However, the report noted that while the increase in inflation rate might be marginal, the cumulative increase could become a cause for monetary policy concern given that in February 2014, the year on year retail price inflation was 7.7 per cent and will now peak at 8.3 per cent, up by 0.6 per cen.

    According to FDC, even though inflation rate is within the six to nine per cent target range, it will only be 0.7 per cent lower than the ceiling, a trend that should give the Central Bank of Nigeria (CBN)’s Governor a reason to look at the close relationship between M2 growth and the consumer price index (CPI).

    The CBN Governor is also expected to decompose money supply into the high powered component and other aggregates as the rate of inflation is already becoming part of the political agenda in what is likely to be a keenly contested election.

    “The Central Bank is watching the inflation rate closely because of the fact that rising inflation will seriously undermine the key objective of maintaining the value of the naira at current levels. The new CBN Governor has staked his reputation on his mission to bring down interest rates and thus impact employment indirectly. An increase in the inflation rate is likely to make the reduction of interest rates less imperative,” FDC stated.

    Notwithstanding, the report indicated that the exchange rate would remain stable as increased foreign reserves has placed the apex bank in better position to defend the currency.

    ‘’We do not expect any significant impact of the projected increase in inflation rate on the interbank market in August. However, it will make portfolio managers become jittery, since an increase in rates will de-press bond prices and could lead to diminution in value of their portfolios. But irrespective of the inflation numbers, we do not expect increased volatility in the money markets as our projection remains within the target band of the CBN,” the report stated.

  • Traders seek tight security at Gosa Market

    Traders at Gosa Market have appealed to the Federal Government and the Federal Capital Territory Administration to provide more security at the market to prevent Boko Haram insurgents from destroying it.

    Some traders told our correspondent that as a result of threats of Boko Haram attacks, the market doesn’t witness huge crowd of customers as it used to.

    The market, located outside the city centre along the Airport Road attracts many sellers and buyers within and outside Abuja opens on Fridays. Due to the influx of people, security operatives especially, the police are always present in order to forestall any breakdown of law and order.

    The insecurity situation in the country orchestrated by the Boko Haram Islamist sect is currently hindering activities at the market. People who visit the market on Fridays do so out of fear.

    A Garri seller Mrs. Abigail Simon told our correspondent that fear people carry out transactions in the market in fear, even as she urged security operatives not to rest on their oars. She said security in the market is gradually dwindling.

    Mrs. Simon, who has been selling Garri at the market for over three years said: “Since I have been selling garri here, the crowd that comes to this market every Friday is unprecedented. Before the bombings in Abuja, people move freely in and out of the market without fear. But now the situation is changing.

    “People are no longer coming to the market as before. Though security operatives are doing their best, people need to be re-assured that Boko Haram do not destroy the market. I do not know where to go to. This is the place I make money for the upkeep of my family.

    “I am a widow and a mother of three. I always pray every Friday when coming to Gosa Market. I know God will not allow Boko Haram’s wish to prevail.”

    Another seller, John Okwe, who sells secondhand clothes told our correspondent that business was on the upbeat before the current security situation, adding that many people, especially his customers, do not come to the market again due to bomb scare in Abuja.

    Okwe said: “I do not blame them. Who wants to die? But all I am begging is for government to further secure our markets within FCT, especially Gosa Market. We the sellers are begging for more security.”

    Ibrahim Umar, who always visits the market every Friday to buy things, expressed his fear that steps need to be taken to avoid crisis at Gosa Market.

    His words: “I cannot do without coming to the market every Friday. I always shop here because goods are cheaper and affordable here. I am used to coming to this market and I cannot afford to stop coming here. Government should intensify action towards securing this place. The market is where most less-privileged people come to buy goods because things are cheaper here.”

    The traditional head of Gosa community in Abuja Municipal Area Council (AMAC), Mr. Wakili Istifanus also urged watertight security measures for the market.

    He called on the chairman of the area council, Micah Jiba, to provide the management of Gosa Market with the necessary apparatus to enable traders to carry out their business activities without fear.

    One hopes that other markets in the FCT will receive genuine security attention to avert calamity.

    Many markets, malls and stores where people shop dot the Federal Capital Territory (FCT). Among the major markets are Wuse, Garki; Utako and Garki markets. Others are the Dei Dei Building Material Market, Gudu Market and Maitama Fruit Market.

    Of these, Wuse Market is the most famous and is located in Zone 5 of Wuse District. It is a general market where one can buy almost everything; ranging from food stuffs, fresh vegetables, meat, clothes, electronics, furniture, phones, rugs and carpets, among others.

    Prices of goods in Wuse Market are relatively high compared to what obtained in other markets like Utako and Garki. The prices are cheaper when compared to prices in malls and stores. One good thing about the market is that it is organised and clean.

    One sore feature of the market is traffic jam that motorists experience while driving into or out of the market, especially in the evenings.

    Another market for general goods is the Garki Market located in Garki District of Abuja. It also has variety of items from food stuffs to clothes but it is not as famous as the Wuse Market. Food stuff is cheaper in Garki Market compared to what obtains in Wuse Market.

    Utako Market is another general market located in Utako District of Abuja.

    Garki International Market is a modern market located in Garki 2 District of Abuja.

    Dei Dei Building Material Market is another market where specialised wares are sold. The main feature of this market as the name implies, is building materials. It is located in Dei Dei District at the outskirts of Abuja.