The original Nigerian Stock Exchange was established in 1960
and currently has some 180
listed companies with a total market capitalisation as at the end of 1997
of around $3 billion. All listings are included in the only index, the Nigerian
Stock Exchange All Shares Index.
In Q1 1998, the NSE management protested officially to the government about
the contents of the report of a committee set up by the government, headed by
Dennis Odife, a respected banker, on the reform of Nigeria's capital market.
The NSE said the report's recommendations for setting up what would be called
the Stock Exchange of Nigeria, coupled with the reversion of the NSE to its
former name of the Lagos Stock Exchange (LSE), was bound to be misunderstood by
many Nigerian and foreign investors, who might question the rationale for
downgrading the NSE to a local stock exchange. NSE officials requested that the
exchange be allowed to retain its name and to operate on a level playing field
with the proposed government exchange, and argued that SEN should not be given
undue advantage over the NSE and other competitors. The Securities and Exchange
Commission (SEC), the apex government body which regulates the capital market
in Nigeria, favours a multiple exchange system, which it views as a better
option for attracting investors to cities other than Lagos, the business nerve
centre of the country, where capital market activities are concentrated.
The controversial second stock exchange, proposed for the federal capital of
Abuja, was due to open in mid 1998 despite business's view that the country was
being served adequately by the Lagos exchange. The new exchange was to be
registered with a share capital of 1 billion naira and an issued share capital
of 500 million naira. The exchange is said by many to be an unnecessary
duplication and that the move is based largely on political motives, as
Government has long tried to persuade business to relocate to the new capital.
The Lagos Exchange is an affiliate member of the Federation of International
Stock Exchanges (FIBV). The Exchange is an Observer at meetings of
International Organisation of Securities Commissions (IOSCO). The Nigerian
Stock Exchange is also a foundation member of the African Stock Exchanges
Association (ASEA).
The Exchange has an Automated Trading System. Data on listed companies
performance are published daily, weekly, monthly, quarterly and annually.
In order to encourage foreign investment in Nigeria, the government has abolished legislation
preventing the flow of foreign capital into the country. This has allowed
foreign brokers to enlist as dealers on the Nigerian Stock Exchange and
investors of any nationality are free to invest. Nigerian companies are also
allowed multiple and cross border listings on foreign markets.
Trading days and times on the Lagos Exchange are Monday to Friday, 11:00 to
13:00. Charges include a 3% commission of the traded value of shares and a 1%
Securities and Exchange Commission fee.
Withholding tax on dividend and interest remains at 10%; corporate income
tax, 35%, capital gains tax, 10%.
The following procedures are to be adopted by the foreign
investors who intend to bring in investible funds under the new legislation :
- The prospective investor appoints a local stock broker of his own choice
- The broker and the investor agree on a bank in Nigeria for the investor
- The potential investor then informs the bank on how much he is investing
- Thereafter, the money is routed by electronic transfer to the designated
Nigerian bank, cash movement for dealing in securities is not allowed
- On receipt of the funds, the bank issues the investor with a Certificate
of Capital Importation (CCI)
- With this Certificate, the investor through his stockbroker, enters the
market; invests in any company of his choice
- and if at any point in time the investor wants to put out, he must go back
to the bank with his Certificate of Capital importation and transfer all
proceeds abroad including profit, net of all taxes.
Dealing Members of The Nigerian Stock Exchange (Stockbrokerage
Firms) can now accommodate foreign shareholders in their equity capital; or go
into any form of Partnership with foreign stockbrokerage firms.
Application from foreign stockbrokers as Members on The Nigerian Stock
Exchange can now be entertained within The Rules and Regulations of The
Nigerian Stock Exchange, as well as registration with Securities and Exchange
Commission and Corporate Affairs Commission.
Companies quoted on The Nigerian (Lagos) Stock Exchange can now
make new issues which could be subscribed to by all persons irrespective of
nationalities and to any level within the capital structure of the companies.
Quoted companies may also seek multiple/cross border listing, subject to The
Nigerian Stock Exchange "Memorandum of Understanding" with such
international stock exchanges.
Companies making initial public offers through The Nigerian Stock Exchange
should ensure that henceforth their prospectus are issued to accommodate all
subscribers whether Nigerians or foreigners.
Dealing members may now buy and sell quoted securities on
behalf of Nigerians and non Nigerians within the Rules and Regulations of The
Stock Exchange.
Accordingly, current Transfer Forms that contain attestation of Nigerian
citizenship should now be amended to allow transfers to Nigerians and
non-Nigerians.
All the securities listed on The Nigerian Stock Exchange Official List are
still registered securities, in which case bearer note transactions remain
inadmissible on The Exchange.
As the total Market Capitalisation of each quoted company is listed on The
Exchange, all divestments or sale of shares must be effected on the Trading
Floors through Stockbrokers licensed by The Stock Exchange.
Investors should note that share certificates of companies quoted on The
Exchange are negotiable instruments, hence Registrars should NOT seek the
approval of the vendors before effecting transfers. In effect, owners should
protect their certificates as they would their currencies.
The Nigerian Stock Exchange through its Central Securities Clearing House
provides Custodial services to all investors on request.
To avoid concentration of share ownership in few hands, nominal transfers
are still limited to among/between family members and associated corporate
entities.
As soon as the holding of an individual or corporate body in a
quoted company gets to 5% of the equity capital, the beneficiary must notify
The Exchange; also Directors' Interests must be disclosed.
The market is still an as cash market and therefore settlement
for transactions on The Exchange is on "Account settlement's" basis.
This is done fortnightly in accordance with the settlement roster issued at the
beginning of each year to all Dealing Members. However, as soon as the Central
Securities Clearing House, promoted by The Exchange commences operation,
delivery and settlement on The Exchange will be done 5 business days after
transactions.
The Nigerian Stock Exchange publishes a Daily Official List
which provides information on Daily transactions on The Exchange. It is
available to subscribers at the end of each Trading Day. Also, this information
is transmitted globally via the Reuters International Network to which The
Exchange is linked on line. The code of The NSE on the Reuters Networks is NSXA
- B.
The Exchange also publishes Weekly, Monthly and Quarterly reports and
trading statistics.
All foreign enquiries concerning investment or divestment through The
Exchange should be made via Members of The Nigerian Stock Exchange
(Stockbrokers).
The Nigerian Stock Exchange All-Share Index 100 (1984) was
6992.10 at end 1996 and 8561.39 at end March 1997.
During 1998, foreign investors spent a total of 4.2 billion naira on the
shares of quoted companies in Nigeria, a 426% improvement over the previous
year. In turnover terms, a total of 1.9 billion shares worth 12.6 billion naira
were traded at the end of November 1998, in contrast to 1.3 billion shares
valued at 11 billion naira traded on the exchange over the whole of 1997. The
new issues market performed well, with approval granted to 32 companies to
issue fresh securities worth 15.9 billion naira.
| Indicator |
(End) 1995 |
(End) 1996 |
% Change |
| All-share index |
5092.15 |
6992.10 |
37.3 |
| Market Capitalisation (N billion) |
171.1 |
285.6 |
66.9 |
| Turnover Volume (N million) |
397 |
882 |
122.2 |
| Turnover Value (N billion) |
1.83 |
7.063 |
284.0 |
| Number |
31 |
36 |
16.1 |
| Value (N billion) |
7.063 |
21.500 |
202.800 |
| Foreign Investment Portfolio Transactions ($US
million) |
1.137 |
32.99 |
|
| Average P/E Ratioe |
9.2 |
12.2 |
|
