The Securities and Exchange Commission is spearheading the commemoration of the 50th anniversary of the nations capital market. Code named Project 50, it has been packaged as a laudable initiative through which the Project 50 partnersSEC, the Central Bank of Nigeria, and the Federal ministries of Finance and Trade and Investment are collaborating to project Nigeria as a preferred investment destination. The theme of the celebration is, "Nigeria, the preferred investment destination."There can be no superior shot-in-the-arm to the Nigerian capital market than Project 50. The performance indices of the market reflect a global downward trend in which markets, globally, have stayed southwards in the aftermath of the global financial crisis and the economic recession which attended it. Though the performance indicators of Nigerias capital market have remained lower than their pre-2009 figures, the Nigerian market continues to perform better than a lot of other markets. There is no doubt that the Nigerian capital market was headed for a comprehensive collapse but for the radical interventions undertaken by SEC. The market would have gone under in the face of the combined consequences of the larcenous supervisory regime of the former leadership of the NSE on the one hand, and the global economic meltdown on the other. The Nigerian stock market came into being in 1960 but started trading shortly after independence on June 5, 1961 after its inauguration. It was then known as the Lagos Stock Exchange but later, in 1977, it became the NSE following recommendations by the Federal Government Financial System Review Committee of 1976. Among those that signed the Memorandum and Articles of Association were Sir Odumegwu Ojukwu, Akintola Williams, C.T. Bowring and John Holt, an investment company. At inception, only four companiesNigerian Tobacco Company (now British American Tobacco), John Holt Investment Company Limited (ordinary stock), John Holt Investment Company (preference stock) and the Nigerian Cement Limitedwere listed on the Exchange Trading then done manually through a system tagged the Call-Over system. A Call-Over clerk used a white chalk to indicate buyer and seller position. As more securities were listed, the system changed from a black board to a round table. From the round table, it transformed into electronic trading where traders transact business via computerised trading system.From the companies that were initially listed, the Stock Exchange has assisted up to 260 small, medium and large scale companies to be quoted on its Exchange categorised into first tier, second tier and recently, Pripex (Private Primary Exchange). This is a great achievement, considering the fact that the NSE is a Third World stock exchange. From the paltry N500 market capitalisation in 1961, the NSE grew to N1tn market capitalisation in 2007. This was a landmark achievement by an emerging market. The N1tn market capitalisation mark helped immensely in attracting foreign investors, who saw Nigeria, through the stock exchange, as an investment destination.The SEC in Abuja reported that there were five million investors in the capital market within its 50 years of regulation. According to SEC DG, Ms Arumma Oteh, "current statistics reveal that only about five million Nigerians invest in the capital market."Of this total, only 230,000 people, representing 0.15 per cent of the total population invest in Collective Investment Schemes, proving that there is great opportunity for growth in this aspect of the market both for the investors and managers of the funds.However, the 2008 global financial crisis led to the stock market crash. But the market crash cannot be solely attributed to the NSE alone, because it was a spill-over effect from the mortgage collapse in America and Europe. Among the success of the Exchange within the period of time was the attraction of massive foreign investment from Europe, America, Asia, Latin America and most especially, from other African countries. These foreign investments ran into billions of naira.Since the global meltdown began; efforts have been made to tackle the NSE problem. For example, the Federal Government in 2008 set up a committee which came up with some recommendations such as the introduction of market makers and share buy-back. While these have not become operational, SEC set up a 15-man national committee to review the market structure and processes. Based on their findings, the committee made 32 recommendations aimed at transforming the capital market to a world-class one. The management of SEC has started the implementation of some recommendations approved by the board.According to market analysts, the performance of the Exchange these 50 years has been impressive. The All Share Index currently at about 25,471 points was formulated on January 3, 1984, with index at 100 points on that day. The ASI attained its highest value of 66,371 points on March 5, 2008 when market capitalisation hit N15.67tn.In terms of concrete achievement, the NSE has provided long-term investment outlet for domestic investors since inception and also foreign investors from 1995 when the Exchange Control Act of 1962 and the Nigerian Enterprise Promotion Decree of 1989 were repealed. This enabled foreign investors unlimited access to the Nigerian capital market.Another big leap for reform is the move to demutualise the stock market and make the Nigerian capital market more internationally competitive. SEC has also undertaken a review of its internal structures to improve efficiency and service delivery by committing resources to enhancing processes through the fortification of ICT platform in the areas of registration, returns rendition and analytics. To address knowledge gaps, SEC has continued to invest in capacity building initiatives for staff, operators and the general public. The two critical factors keeping equity prices low are low confidence and liquidity. Project 50 is thus a good platform to address this and at the same time push for attracting the required liquidity into the market. Investment on Project 50 is a partnership which portends great prospects not just for the capital market but also for the economy.Hakeem is market analyst, investment advisor and public affairs commentator. He wrote from 11, Olufunmilola Street, Ikeja, Lagos.
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