• Investors want govt to prioritise stock market issues, tackle insecurity, others
• NSE All-share index plunges by 24 per cent in 12 months
With the unprecedented lull witnessed in the nation’s stock market in the last one year, culminating to a loss in the All-share index increase by 24 per cent, stakeholders have stressed the need for government to position the market at the centre of policy formulation in order to achieve a more vibrant and competitive market.
The stakeholders, while assessing President Muhammadu Buhari’s one year in 2nd term noted that the socio-economic situation in Nigeria in the past one year of President Buhari’s tenure impacted negatively on the capital market.
They identified insecurity, unfavourable operating environment, lack of incentives, corruption and inconsistent government policies as factors inhibiting the growth of the nation’s capital market and consequent contributions to the economy.
Indeed, the All-share index of the Nigerian Stock Exchange (NSE) which stood at 31, 307.00 as at Tuesday, May 28, 2019, the eve of the 2nd term inauguration of Buhari as President, now stands at 25, 204.75 at the close of trading on Friday, May 22, 2019, shedding whooping 6,102.25 points or 24.2 per cent.
This was in spite of various efforts put in place by the regulators to boost investors’ confidence as restore the market on the part of sustainable recovery.
From a six per cent Gross Domestic Product (GDP) six years ago to recession in 2016, with postrecession’s fragile recovery below two per cent till date, and now predictions of an imminent recession in 2020, it’s been no respite for both the citizenry and economy.
It is noteworthy that the nation’s economy had been grappling with weak recovery from the 2014 oil price shock to the 2016 economic recession with GDP growth tapering around 2.3 percent in 2019.
Capital market operators argued that the first year of the 2nd term of President Buhari has not differed from his previous years in power. According to them, insecurity has continued to permeate the length and breadth of the country under his watch.
Specifically, the Vice President of High cap Securities, David Adonri said: “While Boko Haram continued their reign of terror in the Northeast, Fulani bandits made the Northwest and Middle belt ungovernable. Occasionally, the bandits extended their criminalities and violence to the South.
“From a macroeconomic perspective, major economic indicators performed low. The GDP grew by paltry 2.25 per cent in 2019, way below the population growth rate of over 3.5 per cent. Inflation rate started to inch up in 2019 closing in double digits at 11.85 per cent.
‘“External reserve dropped to about USD 39Bn while unemployment rate soared to about 30 per cent. In summary, the economy faced very severe socioeconomic difficulties during the first year of President Buhari’s administration.
“The situation is even worse now with the catastrophe of Covid19. Although the crude oil market started to recover in 2019, it finally collapsed when the crude oil price per barrel fell below USD 0.00 on Monday 20th April 2020. Even before the onset of Covid19 in Nigeria, Fitch and Moody’s had downgraded the country from stable to negative.
He continued;” The socio-economic situation in Nigeria in the past one year of President Buhari’s tenure impacted the capital market negatively.
Buildup to 2019 general election was a disaster for the capital market. Frightened foreign and domestic investors exited the market, which plunged it into liquidity crisis from 2nd quarter of 2018. As a result, the market lost 17.81% with All Share Index (ASI) of the NSE closing at 31,432.09.
“The situation further deteriorated in 2019 due to the uncertainties that surrounded the 2019 general elections. The election was adjudged non-credible and fraudulent provoking low investors’ confidence and weak macroeconomic conditions. As a result, the Market further lost 14.6% with ASI closing at 26,842.07 in 2019. As at May 2020, the ASI had fallen further to 23,709.44.
He added: “Severe crisis in the economy, expected to degenerate into the worst form of stagflation arising from Covid19 devastation, could determine the future of this administration, further exacerbated by weak governance at the center.
“There is very little hope that the capital market can be vibrant, liquid and profitable in the foreseeable future under this administration. However, if the President starts to connect better with the people and discontinues his parochial policies, then things can change for the better.”
He urged the president to allow the economic experts assembled in the economic management team to take control and domesticate the economy.
He stressed the need for the economic management team has to ensure that the country focuses on the heavy industrial sector, noting that the underdevelopment of the sector has prevented industrialisation.
For the health care sector, Adonri pointed out that the scientists and biomedical engineers must be organised and empowered to locally produce all the machinery, medical equipment and medical devices used for healthcare service delivery.
“Apart from the doctors and nurses who are front liners, the people who make healthcare work and commercially viable are the scientists and biomedical engineers who are behind the scene.
“ They have to be organized and empowered to locally produce all the machinery, medical equipment, medical devices and medicaments used for healthcare service delivery. Enough of importation and shameless begging for foreign aid to drive our healthcare.
“Furthermore, the President should get serious with the war on corruption and stop the deceit. Is he claiming not to be aware of intensified corruption in virtually all government establishments?
“Finally, the mobilization against insecurity under this administration is weak. It took Chad, a poor country with a population of 13 million people just 7 days to defeat Boko Haram and chase them back to Nigeria.
“ This is the tenth year of prosecuting the Boko Haram war and Nigeria, which is the richest country in Africa with a population of over 200 million people is yet to defeat the ragtag insurgents.
“Fulani bandits are still causing mayhem all over the North. Even yesterday, they massacred over 20 innocent women and children in Southern Kaduna.
“If the President wants his remaining years in power to be remarkable, there must be peace and progress all over Nigeria,” he added
The Publicity Secretary of Independent Shareholders Association, Moses Igbrude.
The capital market in the past one year has been characterised with political and economic issues that have negatively affected the market.
“There was no substantive DG and Board of the Securities and Exchange Commission (SEC), the regulator was running its affairs with fear because they are in an acting capacity. This has impacted negatively on the market.
“The economic environment is unfavorable to businesses because of lack of foreign exchange, Port congestion, high cost of funds as well as policies somersault of the federal government. The 2019 election also affected the market. Currently, the Nigeria capital market is still undervalued.”
Professor of Capital Market at the Nasarawa State University Keffi, Uche Uwaleke, while making an assessment in the areas of insecurity noted that the president has made some effort in dealing with insurgent attacks.
However, he noted that while Boko haram may have been weakened, other forms of insecurity have emerged including attacks on communities by bandits, kidnappings and the seemingly intractable farmers-herders clashes.
Moreso, he pointed out that a major area where the present administration is yet to make a meaningful impact is in the area of job creation.
According to him, unemployment and underemployment rates are quite a high due in part to the challenge still posed by the power sector.
He stressed the need to focus more on job creation to reduce rising unemployment and poverty rate in the country to the barest minimum to stimulate economic growth.
“One cannot objectively assess the Buhari administration’s first year of his second term in office in isolation of the first since it is a continuation of the same regime.
“And the best way to go about it is to take up the administration on its campaign promises based on three pillars of addressing insecurity, corruption and the economy.
“On insecurity, some effort has been made in dealing with insurgent attacks. However, while Boko haram may have been weakened, other forms of insecurity have emerged including attacks on communities by bandits, kidnappings and the seemingly intractable farmers-herders clashes.
“Regarding corruption, there is no doubt that the Treasury Single Account which got momentum during the Buhari’s administration, as well as the IPPIS scheme, has gone a long way in curbing sharp practices in the public sector.
He continued: “Also, a number of high profile cases are being handled by the EFCC. But a lot still needs to be done in this regard especially in the civil service at both the federal and state levels where the scale of corruption is perceived to be high.”
In the area of the economy, he noted that any fair assessment must take into consideration the 2016 economic recession and the unprecedented negative impact of COVID’19 on an economy that was gradually recovering and positioning for growth. “Recall that GDP growth was 2.55 per cent in the last quarter of 2019 before dropping to 1.87 per cent in the first quarter of 2020 due to COVID’19 and the collapse in crude oil prices.
“But for this pandemic, I can say that the economy was witnessing relative macro stability especially with respect to the inflation rate and exchange rate. Without a doubt, the CBN under the present administration has done a lot in stabilising the economy and even stimulating growth through its interventions especially in agriculture. “
He applauded the bank’s Anchor borrower program, which has ensured near self- sufficiency in rice production, adding that the conditional cash transfer and other social intervention schemes of the present administration have helped to reduce poverty.