Capital market Stakeholders target higher GDP contribution

The 10% contribution of Nigeria’s capital market to the GDP has drawn criticism from market participants.

The stakeholders said that the Nigerian capital market’s present contribution to the GDP was insufficient during the Institute of Capital Market Registrars’ 11th Annual Conference on Saturday in Lagos.

Speaking at the conference with the theme “Sustainability of the Nigerian Capital Market as a Fuel for Economic Growth and Prosperity,” Dr. Abiodun Adedipe, Senior Partner at Biodun Adedipe & Co, said the notion that the stock market and economy march in lockstep has eroded recently.

He said that important industries that accounted for between 70% and 85% of Nigeria’s GDP were still not fully integrated into the country’s capital market.

He said, “In fact, movements in the market and the economy are no longer synchronized 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 capitalization is less than 10 percent of GDP. In some jurisdictions, you see it up to two 250 percent and 300 percent.

“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 percent and 82 percent of Nigerian GDP.”

Ademola Aladekomo, Chairman of Chams Plc, asserted that there was a discrepancy between the assertion that there were 50 million investors in the Nigerian capital market and the actual performance of the market.

Aladekomo claimed that efficient identification management of the investors in the capital market would result in huge growth while citing information from a Straw poll performed by Chams Plc.

He continued, observing that this discouraged investors since the paid dividend was just about N180bn or 5% of the annual dividend given.

Additionally, he clarified that the KYC procedure was excessively onerous and complicated for the investors, particularly for those who had previously shared at multiple organizations.

Aladekomo also counseled the authorities to devise plans for luring tech firms that would tempt millennials to engage in the Nigerian stock market.

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Temi Popoola, the chief executive officer of the Nigerian Exchange Limited, discussed the “Role of Digital Technology in the Nigerian Capital Market” and noted that both the nation and the world had made significant strides toward digitization.

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.”