For about two months, few investors in the Nigerian capital market are gradually picking interest in the market as the share prices witnessed a little upswing. In January 2010, the major market indicators witnessed an upward movement. For instance, the market capitalisation and all share index which closed December 2009 at N4.90 trillion and 20,810 respectively increased to N5.397 and 22,411 at the end of January 2010. The indicators sustained the increase closing at N5.56 and 23,096 at the end of February 2010.
Yinka Coker, an investor, is among few shareholders who still have confidence in the stock market despite the lull witnessed in the last two years. He says: “I know this is the time everybody wants to sell as the prices of what used to be hot stocks have crashing like a pack of cards. I chose to buy more shares to position myself for the future. Though, the gains are minimal but there are signs that things are getting better.”
However, it appears the much awaited rebound of stock prices may surfer major setbacks if some leadership issues among the regulators are not properly handled. Market experts believe that these issues are major threats to the confidence of embattled investors. Part of the issues is the succession plan of Ndi Okereke-Onyiuke, director-general, DG, Nigerian Stock Exchange, NSE.
There are speculations that the current NSE boss does not want Lance Elakama, assistant director-general of the exchange, to succeed her. Some members of council of the exchange are said to be uncomfortable with this move, just as some stockbrokers. Okereke-Onyiuke has once confirmed in a media briefing last year that none of the general managers will succeed her after retirement. “When I retire, I go with all general managers and the assistant director-general. We need to give opportunities to other people to serve and do things better than the way we did things,” she said.
Among some member of the council whose vote decides the successor, Elakama is said to be a preferred candidate. “We need to get it right at least for once this time. The constitution of the exchange does not permit anyone to choose for us. We will invite any suggested candidate for a chat and screening without any sentiment but that does not mean we are compelled to approve the candidacy,” a member of the council, who prefers anonymity told the magazine.
To Tolu Adebowale, a stockbroker, the market has suffered enough from different irregularities that contributed to its present state. She urged the management of the stock exchange to tread this path with care because according to her, the market is still fragile and very sensitive to information. “Investors are watching and that is the more reason the exchange needs to be careful so that it does not send a wrong signal to the public.
Operators in the market believe that renewed campaign against market infractions that boosted activities in the market in January and February. Another issue that may delay the rebound of the market aside from the economic recession is the appointment of Udo Udoma, a former senator and chairman, Securities and Exchange Commission, SEC, the apex regulator of the market, as the chairman of UAC Nigeria. Udoma is also the chairman and vice chairman of Unilever and Linkage Assurance respectively. Both companies are are quoted on the NSE.
Since Udoma accepted the appointment some weeks back, it has generated controversy among stakeholders in the market including the Senate Committee on Capital Market. Most of the stakeholders are asking him to either step down as chairman of the board of SEC or resign his chairmanship and vice chairmanship positions in UACN and Linkage Assurance respectively. They enjoined Remi Babalola, minister of state for finance, to direct Udoma to either step down as the chairman of the board of Unilever or any quoted company.
Findings revealed that section 4(1)(a) of the Investment and Securities Act, ISA of 2007 vests the board of the SEC with enormous powers, adding that it is in pursuance of the fulfilment of the responsibilities of regulating and developing the market that the Act in section 13 makes elaborate provisions for the functions and powers of the commission. Taking closer look at the functions and powers of the commission under section 13 of the ISA and the contemplation of the legislature when enacting the law seems to clearly suggest that the office of the D G, chairman, the commissioners and staff of SEC ought to be free from any relationship that would tie them to any of the companies regulated by the commission.
Taiwo Oderinde, president, Corporate Investors Association of Nigeria, believes the market deserves and is yearning for an impartial SEC that safeguards the public interest. He explained that the elimination of room for unregulated relationship is critical to any perception of integrity or ability of the regulator to take actions without fear of favour. “I believe it is for this reason that SEC queried the DG o the DG of NSE on her continued chairmanship of the board of Transcorp and at the same time occupying her position in the NSE. Boniface Okezie, president, Progressive Shareholders Association of Nigeria, believes Udoma’s appointment as UACN chairman is one of the infractions in the market. “How can there be transparency when a regulator is also an operator? It is only in Nigeria that I have seen that and it will not change until the powers that be recognise the fact there is no way you can be a judge in your own court and there will be fair judgement. It will be very difficult for him to convince us that he would be fair when it comes to the affair of UACN if brought to SEC. What would stop the senator from revealing the secret of SEC to UACN if an investigation issue occur?” he asked. He attributed the present financial crisis to the infectious relationship that exists between the regulators and the operators in the market. However, the argument being made in favour of Udoma is that he is not involved directly in the day to day operations of the commission. Yet, others believe that he carries on like an executive chairman insisting also that SEC is not a regulator of public quoted companies but the regulator of the capital market.
Okereke-Onyiuke: Knows ‘who will not succeed’ her
Elakama: Preferred candidate
Udoma: His appointment mired in controversy
Oderinde: Asks for an impartial SEC
Okezie: Sees Udoma’s appointment as an infraction in the market |
