The Nigerian stock market, has enabled governments and industry to raise long-term capital for financing new projects, and expanding and modernising industrial/commercial concerns.
If capital resources are not provided to those economic areas, especially industries where demand is growing and which are capable of increasing production and productivity, the rate of expansion of the economy often suffers.
A unique benefit of the stock market to corporate entities is the provision of long-term, non-debt financial capital. Through the issuance of equity securities, companies acquire perpetual capital for development.
Through the provision of equity capital, the market also enables companies to avoid over-reliance on debt financing, thus improving corporate debt-to-equity ratio.
The Nigerian Exchange Group (NGX Group) formerly known as the Nigerian Stock Exchange, dates its history back to 15 September 1960 when the Lagos Stock Exchange was founded. In December 1977, the name was changed to the Nigerian Stock Exchange, while in 2021 the Nigerian Stock Exchange was fully demutualised changing from a member-owned not-for-profit entity into a shareholder-owned, profit making entity. This gave rise to a new structure, Nigerian Exchange Group Plc (NGX Group) with subsidiaries, Nigerian Exchange Limited (NGX Exchange), NGX Regulation Limited (NGX REGCO), and NGX Real Estate Limited (NGX RELCO).
The doyen of the Nigerian capital market, Mr Rasheed Yusuf expressed that the impact of the capital on economic growth has been enormous in both the African and global markets.
According to him, developing states, such as Lagos State has benefited from the capital market to raise needed funds to construct key infrastructure in the state.
He expressed that the federal government over the years has utilised the capital market to raise bonds amid its budget deficit to support major road constructions across the country.
He said the manufacturing companies and banks amongst others, have tipped from the abundance of the capital market to access liquidity, adding that “capital market is the source of funding for most of government and companies’ capital projects.
Chief executive officer and managing director at APT Securities and Funds Limited, Mr. Kasimu Kurfi, said the NGX contribution to the nation’s economy is tremendous.
According to him, before, we had market capitalisation that was in the millions but today, we have a market capitalisation that is in trillions of naira. The capital market has provided a place for listed banks and insurance companies to meet recapitalisation exercises in their sector.
“Mind you, in the last 10 years, we have seen additional five companies listed on the NGX. Of course, these companies contributed nothing less than 60 per cent to the market capitalisation as of today. Do not forget, these companies are not government-owned companies.
“The capital market has been a driving force in the nation’s GDP growth and if more companies are listed, most especially the telecommunication and upstream companies, it will enhance the economic growth and capital market wealth creation.
“In the last 62 years, the capital market has played its role in economic growth through companies’ access to capital and government borrowing to finance key infrastructure projects across the country.”
The managing director of Lancelot Ventures Limited, Mr Adebayo Adeleke, stated that the NGX is a platform for trading in equities and an indispensable lever in modern capitalism.
According to Adeleke, it helps and facilitates the process of capital formation which is the engine room of economic development. With a total market capitalisation of about N26 trillion, the Exchange has mirrored the economic growth trajectory of the country over the past 62 years.
“It also portends such accelerated growth that the nation is likely to experience over the next ten years as the youth unleash their entrepreneurial spirit in all facets of the nation’s economy,” he explained.
He pointed out that “the platform (the NGX) shows the emergence and transformation of the banking landscape, building materials expansion and lately the telecommunications industry. These three industries who, among others, probably account for over 80 per cent of the entire market capitalisation are reflective of significant growth areas in the economy over the past decades.”
However, analysts called for a market structure where more medium and large companies across the sectors of the economy are listed on the Exchange.
Between Depleting Workforce And Declining Productivity