The Nigerian stock market was not very popular among Nigerians in the locust years of military rule. Those were the years when only few wealthy people monopolised the benefits of the stock exchange and used it to their advantage and those of their family members. Majority of Nigerians were left in the dark.
That perception would change after the advent of democracy. The government then took a radical step in the telecommunication sector which had a permanent effect on the restructuring of the stock exchange operations.
The D.G. of the stock exchange-Professor Ndidi Okereke with the approval of the then President Olusegun Obasanjo purchased and installed I.C.T. facilities to improve the operations of the exchange. The first noticeable result was the live trading on computers and the crediting of investors’ account within four days of transaction. That change was revolutionary.
The success encouraged stock broking firms to buy into the I.C.T. revolution which saw many of them adopting online services to improve their transactions.
By the time the banking industry consolidation was conzumated in 2006, the popularity of the Nigerian stock market and the inherent advantage in wealth creation and empowerment was on the upswing among Nigerians. Nigerians at home and abroad joined the investors train on the exchange to share in the wealth creation rave.
The total capitalization which was less than 1 trillion naira in 1999 jumped to about 15 trillion naira before the bearish season set in early 2008. The bearish melt down and the global financial crisis had since driven the capitalization of the Nigerian stock market to about 7 trillion naira as at January 2009.
After the banking consolidation, it became obvious that investors needed more information about transactions on their account. The trade alert service was introduced which now make it possible for investors to be informed through their cell phone what transaction was done in their account. That improved transparency in the operation of the N.S.E. and its sister organisation-The Central Security And Clearing System.
The problems of issuance of certificates after public offers had been a recurring stigma for the N.S.E. as registrars of companies found it difficult to meed set deadline on issuance of certificates. To solve this problem, the e-certificate, e-dividend and e-bonus policy was introduced to enable investors enjoy maximum benefit from their investment. Nigerians and foreigners can now easily transact investment online and be duly informed of the status of their accounts.
Although the e-dividend and e-bonus has been having a less problematic implementation, the e-certificate has not had such a smooth ride. Investors want an extension in its implementation beyond the initial deadline of December 2008. The Board of the Nigerian Stock exchange seems to have agreed with investors. Investors still have more time to dematerialized their certificates before the outright ban of paper certificate.
One of the lessons learnt from the bearish melt down of 2008 is the need for market makers. After several consultations, the exchange now have 5 market makers to further deepen standard practice on the stock exchange.
No doubt, the Nigerian stock market has positively impacted on the Nigerian economy. The banks and conglomerates are declaring fantastic results despite the bearish season. Dividends are being declared and bonus issue being given.
What the changes mentioned above will continue to impact on the Nigerian stock market will be fully realized in the coming days. Nevertheless, investors has applauded the improved transparency and still wish for more.