The Edo State Governor, Mr. Godwin Obaseki, has described Nigeria’s capital market as one of the most formidable institutions for finance mobilisation, providing opportunity to raise long-term capital from sectors of the economy with surplus for new projects that will help expand and drive industrialisation.
Governor Obaseki said this in a lecture themed the importance of capital market in the economic development of Nigeria, delivered at the Investiture Ceremony of Mr. Adedapo David Adekoje, as the 10th President and Chairman of Governing Council of the Chartered Institute of Stockbrokers, in Lagos.
He described Mr. Adekoje as a consummate stockbroker, who has contributed immensely to the maturity of the capital market, the institute and to the development of Nigeria.
He continued, “With over two decades’ experience of building and leading integrated and marketing operations for high profile companies such as Halifax Building Society (now Halifax Bank) London; Trade Bank, Nigeria, where he was seconded to their stock-broking firm – Professional Stockbrokers Ltd; his personal and official contributions to the Chartered Institute of Stockbrockers leave us in no doubt that he has very well planted enviable footprints in line with the most desirable, beneficial and acceptable outcomes currently required in taking the Institute and indeed our nation to a globally respectable and prosperous clime.”
On the impact of the capital market on Nigeria’s economy, Governor Obaseki said, “Mobilising resources for national development has for long been the central focus of development economists. As an Institution, which specializes in mobilising finance from the surplus sectors to the deficit sector, the capital market is one of the most acknowledged, resilient and result-oriented means of raising long-term capital for financing new projects, expanding and modernising industrial prospects.”
He argued that even with the buoyant opportunities inherent in the capital market, reaping the full benefits is still largely hinged on the efficient performance of the stock exchange, public understanding of the very specialised and organised nature of the capital market and availability of domestic savings and inflows of foreign capital.
He said, “Critical to the growth of any economy is savings and investments which must be given due attention. For sustainable growth and development, fund must be effectively mobilised and allocated to enable businesses and governments harness their optimal output. When capital resources are not available or provided to needed areas where demand is growing and capable of increasing production and productivity, the rate of expansion of the economy often suffers from equally dire consequences on the employment rate.
Explaining that the capital market provides long-term non-debt financial capital to drive business growth, he said, “With this provision, the capital market enables companies to avoid the burden of debt financing, which leads to higher production cost, inability to produce highly competitive goods or to finance the cost of deriving better innovative ways of production.”
Noting that the capital market was a huge resource during the recapitalisation of Nigerian banks, he said, “There is no doubt that the Capital Market of Nigeria is very resilient. During the banking consolidation which required banks to increase share capital from N2 billion to N25 billion and another round of consolidation which made some of them increase shareholders’ funds to over N100 billion, Capital Market contributed immensely to market capitalisation.
“By March 2008, market capitalisation was in excess N12 trillion while the NSE all share index exceeded 62,000 points. One of the lessons from the banking consolidation is the absorptive capacity of our capital market which stood the test in meeting issuers’ aspirations of raising huge funds from the market. The market also provided a platform for the subsequent acquisition/merger that ensued. What all these symbolise is the efficiency of the Nigerian capital market.”