Stakeholders in the capital market have criticised the 10 per cent contribution of the Nigerian capital market to the economy.
The stakeholders, who spoke at the 11th annual conference in Lagos on Saturday, said the current performance of the Nigerian capital market to the Gross Domestic Product was low.
While speaking at the conference which was tagged, ‘Sustainability of the Nigerian Capital Market as a catalyst for Economic Growth and Prosperity,’ a Senior Partner at Biodun Adedipe& Co, Dr. Abiodun Adedipe, said the common assumption that the stock market and economic moved in concert had weakened in recent times.
According to him, critical sectors that largely contributed between 70 per cent and 85 per cent to the Nigerian GDP were yet to be incorporated into the Nigerian capital market.
He said, “In fact, movements in the market and the economy are no longer synchronised because they do that for just a while and thereafter they diverge.
“I found a very weak correlation between the movement’s growth of the major metrics in our stock market, with the growth of our GDP, very weak and negative covariance.
“The market capitalisation is less than 10 per cent of GDP. In some jurisdictions, you see it up to two 250 per cent and 300 per cent.
“Some of the major sectors that contribute the most to GDP are not well represented in this capital market. I found six sectors in our economy and they include agriculture, trade, ICT and then manufacturing.
“Then, we will take mining, quarrying, and real estate. If you check your data, those six sectors contribute between 77 per cent and 82 per cent of Nigerian GDP.”
On his part, the Chairman of Chams Plc, Ademola Aladekomo, said there was a mismatch between the claim of 50 million investors in the Nigerian capital market and the performance of the market itself.
Whilst quoting data from a Straw poll conducted by Chams Plc, Aladekomo said proper identity management of the investors pin the capital market would lead to tremendous growth.
He added that the paid dividend was just about N180bn, which was only about five per cent of the dividend issued annually, noting that this was discouraging investors.
He also explained that the investors found the KYC process too tedious and not simplified, especially for those who had shared at different companies.
Aladekomo further advised the regulators to find strategies to bring tech companies that would entice the millennials into investing in the Nigerian capital market.
Speaking on the topic, ‘Role of Digital Technology in the Nigerian Capital Market,’ the Chief Executive Officer of the Nigerian Exchange Limited, Temi Popoola, said the country and the globe had made huge progress in digitisation.
He said, “When we talk about digitalization, for example, it’s important to realize that we made a lot of progress, both globally and also in Nigeria.
“It’s over 25 years now that the capital market globally has been paying attention to technology.”
He added that “once COVID kicked in for almost three years, there was no single physical trading on the floor of the Nigerian Stock Exchange in our country.
“They were all digital, no human sort of real physical contact, and there was not a single day of downtime.”
