Posted by By AMECHI OGBONNA on
Two principal officers of the Nigerian capital market regulatory agencies have blamed issuing houses in the country for the spate of rising transaction costs in the market, urging operators to urgently review downwards some of the charges to make Nigeria more competitive.
Two principal officers of the Nigerian capital market regulatory agencies have blamed issuing houses in the country for the spate of rising transaction costs in the market, urging operators to urgently review downwards some of the charges to make Nigeria more competitive.
The Deputy Director General of the Nigerian Stock Exchange, Alhaji Musa Lance Elakama, and Director General of the Securities and Exchange Commission (SEC), represented by Malam Sani Stores, a deputy director at the commission, who spoke at the Nigerian Issuing Houses League 2008 Awards, in Lagos, agreed that the operators in the market must complement efforts of regulators to ensure that the nation's capital market remains investor friendly.
Alhaji Elakama, of the Nigerian Stock Exchange, admitted that although the Nigerian capital market performed well in 2007, as it recorded a whopping N2.4trillion worth of fresh issues, compared with about N1.6trillion, in 2006, the high cost of doing business in the sector did not encourage many entrepreneurs to come to the market during the period. He explained also that return on investment on the market still remained the highest among the emerging markets segment, judging by recent assessment of international agencies, like Standard and Poors.
The NSE deputy director general, who also attributed recent spate of oversubscriptions in some public offerings in the market as a further indication of its depth, however, expressed concern that the high cost of doing business on the market had robbed it of many benefits that ought to have accrued to operators, if they had been competitive in their pricing and charges.
He said: 'Our market is the most expensive, in terms of raising money, because while in other markets, it cost an average of two per cent to raise funds, Nigeria costs between five to seven per cent, which, by all standards, is too high."
Elakama stated that the high cost could be attributed to the fact that issuing houses still collect as high as 1.5 per cent as charges for most capital issues, stressing that there was need to further reduce this to a more acceptable limit.
He explained that it was in the bid to set the pace to make the Nigerian capital market more competitive that the NSE and SEC took steps in the recent past to reduce their charges, but regretted that the issuing houses were yet to follow.
On his part, Mallam Sani Stores, who represented the SEC director general, Musa Al Faki , observed that the capital market, which he described as the livewire and future of the Nigerian economy, should not be burdened with high charges.
He called on the issuing house operating in the Nigerian market to apply wisdom in handling issues relating to transaction cost, so as not scare away genuine investors and businessmen.
In its report entitled, Doing Business, released in 2007, the World Bank noted that Nigeria tops the list of countries with high transaction cost.