‘Business Environment Has Been Very Tough And Challenging’
Sulaiman Adedokun is the Deputy Group Managing Director of Meristem Securities. He holds degrees both in Accounting and Banking and Finance. He is an Associate member of the Institute of Chartered Accountants of Nigeria (ICAN), Chartered Institute of Taxation of Nigeria (CITN) and Chartered Institute of Stockbrokers (CIS). He is also an authorised dealing clerk on the floor of the Nigerian Stock Exchange (NSE). In this interview with BUKKY OLAJIDE, Adedokun talks about the activities of Meristem and other issues involving the African capital market.
BEYOND stockbroking and securities trading, what other things does Meristem Securities do?
Meristem is a financial services conglomerate with five subsidiaries whose service offerings range from brokerage and securities trading. This is done by Meristem Stockbrokers Limited. Meristem Registrars Limited are in charge of Registrars to quoted and unquoted companies.
Meristem Wealth Management Limited takes charge of investment management, wealth preservation, accumulation and transfer as well as succession planning across all age strata. Meristem Trustee Limited is in charge of Trust and Ancillary services while Meristem Corporate Finance is in charge of corporate restructuring, financing and financial advisory services
What are the strategies that Meristem is putting in place to enhance financial inclusion in Nigeria?
Meristem has keyed into the Financial System Strategy (FSS) for ensuring financial inclusion via two of its foremost retail platforms. MeriTrade which is the foremost retail stock and bond trading platform launched to encourage participation of retail investors at the bottom of the pyramid in the capital market with utmost ease, convenience and unhindered access subsidiaries. We also have mutual funds and other fixed instruments for retail, risk-averse investors who are encouraged to develop good savings habit via access to near risk-free investment options at very competitive rate of returns.
Let’s talk about Meristem’s operations and how the investment firm has been able to maintain steady profit in the face of dwindling economic fortunes in the country.
Business environment has been very tough and challenging. However, focus on efficient cost management and information and communications technology for service delivery has been quite helpful.
African capital markets attract about one per cent of global private equity flows. In your opinion, how can the region’s capital markets deepen and broaden?
Generally, the rule of nature in the financial sector is that “capital/fund flows to where yield is highest.” However, this is not without considering risks. Hence with a little tweak, ‘‘capital/fund flows to where yield is highest relative to risks.”
Largely, African markets (ex-South Africa) are frontier markets. These economies are generally in earlier stages of economic and capital markets development relative to the better-known emerging markets. These markets are also characterized with weak rule of laws and unstable governments, lower levels of liquidity, market depth and breadth, poor regulatory and legal framework, and lower level of transparency, and prone to inefficiencies. Therefore, to boost growth and development and attract more capital flows into African capital markets, African governments and regulators need to proffer sustainable solutions to these myriads of problems.
What do you think of the cross border trading between Nigeria and other West African Stock Exchanges?
This will help boost and deepen market in terms of access to capital and product offerings. Cross border trading across West Africa will help achieve a harmonized regulatory environment for the issuance and trading of financial securities across the region, as well as to develop a common platform for cross-border listing and trading of such securities in the sub-region. However, there are processes in place to bring this idea into fruition. The West Africa Capital Markets Integration Council (WACMIC) has been inaugurated as the governing body for the integration of West African Capital Markets.
In your assessment, how would you rate the Stock Exchange’s disposition towards recapitalization and other recent policies being introduced?
This is step in the right direction. However, this is SEC initiative and not the Nigerian Stock Exchange.Meanwhile, hitherto, there was preponderance of fringe operators (brokerage firms) in the market who were faced with challenges of basic infrastructure for minimum service delivery, poor market penetration to the bottom of the pyramid retail investors, amongst other limitations. Despite all these, weekly activity statistics from the Nigerian Stock Exchange (NSE) reveal that 20 out of about 200 brokerage firms account for 90-95 per cent of the entire transactions volume and value. These top 20 firms are well capitalized with sound operation framework/structure as well good corporate governance. On a lighter mood, the number of brokerage firms outpaced quoted stocks on the exchange!
Therefore, it is expected that the recent move by the NSE to institute Minimum Operating Standard (MOS) as well as SEC’s decision to raise standard on recapitalization and reclassification of market operators will help sanitize market for sustainable growth, greater efficiency, increased transparency and ease of enforcement.
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