Nigeria bourse seeks foreign investors to boost economy

Plans to introduce Islamic instruments and bonds to attract investment

Nigeria’s stock exchange is seeking foreign investors as part of its plan to demutualise the bourse and introduce new products including Islamic investments, said Arunma Oteh, head of the nation’s securities regulator.

The Nigerian Stock Exchange is in the “early stages” of demutualisation and will probably hire a new chief executive officer by the end of this year, Oteh, director general of the country’s Securities and Exchange Commission, said in an interview in Bloomberg’s London office. The SEC fired the previous CEO on August 4.

The bourse will consider selling stakes to outside investors, including foreign exchange operators, Oteh said. Building markets for Islamic finance, corporate bonds and exchange-traded funds will help attract investment into sub-Saharan Africa’s second-largest economy and the fifth-largest source of US crude imports, she said.

Restoring confidence

“The role of the stock markets is particularly important as we seek to diversify our economy,” Oteh said.

“The marketplace has to be one that is world class. Allowing both international investors and local investors to look at the exchange as something they can invest in is important.”

Oteh, a former vice-president at the African Development Bank who became head of the securities regulator in January, is trying to restore investor confidence after the benchmark All-Share Index sank 65 per cent from December 2007 to the end of last year amid a banking crisis and reports of market abuses.

The All-Share gauge climbed 0.2 per cent to 24,277.14 yesterday, extending this year’s gain to 17 per cent, according to data compiled by Bloomberg.

The SEC removed Ndi Okereke-Onyiuke as the bourse’s CEO after “inadequate oversight of the exchange, ongoing litigation, allegations of financial mismanagement, governance challenges, and the inordinate delays” on a succession plan, the regulator said last month. Emmanuel Ekazoboh, a partner at Deloitte & Touche, was appointed as administrator.

New listings

The SEC plans to revoke some brokerages’ licenses, Oteh said at a press conference in Bloomberg’s London office on Sunday.

Nigerian Finance Minister Olusegun Aganga is targeting minimum economic growth of 10 per cent as the government improves power and transport capacity, he told reporters in London on Sunday.

The economy expanded by 7.4 per cent in the first half of the year, compared with 5.9 per cent in the same period last year, Aganga said.

The exchange is seeking to increase initial public offerings and Oteh said she expects new stock listings soon from companies in the energy and telecommunications industries.

Building a corporate bond market in Nigeria is a “priority,” Oteh said. Levels of benchmark interest rates, inflation and economic growth are “extremely supportive” for corporate bond issuance and a new tax law has made the debt more attractive for investors, Oteh said.

source : bloomberg