Shareholders sue for merger of stockbroking firms

Ahead of the planned change of ownership (demutualisation) of the Nigeria Stock Exchange (NSE), shareholders’ group, Independent Shareholders Association of Nigeria (ISAN), has called for the consolidation of 255 stockbroking houses in the country, as only 10 per cent of the firms dominate the market.

The National Coordinator of the Association, Dr Anthony Omojola, while speaking at a virtual interview, insisted that such recapitalisation would give rise to mergers and acquisition, which would enable the emergence of stronger firms in the capital market.

He insisted that the prevailing fragmentation does not augur well for the market, noting that a well-recapitalised firm would boost transaction volume, increase overall market performance and make the capital market more attractive in the global arena.

The Securities and Exchange Commission (SEC), had in February this year, revealed plans to consider fresh recapitalisation of stock broking firms operating in the local bourse.

The Acting Director-General, SEC, Ms Mary Uduk, during an interaction with journalists said with only 10 per cent of the 255 stock broking firms controlling 80 per cent of the market activities, there is a need for recapitalisation.

Already, other sectors like the banking and insurance are currently warming up for recapitalisation; the industry regulators have given them notice for the exercise.

Uduk had said: “A number of other sectors are recapitalising, the Central Bank of Nigeria (CBN) has given the banks notice to think about it. We are also asking our capital market operators to also think about it because sooner or later, it would happen.

“If we have 20 or 50 big firms playing as supposed to 255 that we have now, I think the market will be better. We want strong firms, so it is something that should happen. Well capitalised firms as supposed to the situation we have now.”On the group’s expectations post COVID-19, Omojola said the SMEs industry is likely to witness improved growth going forward due to a number of palliatives and tax incentives extended to the sector by the government.

He stressed the need for government to do more in the areas of granting more palliatives and incentives to investors and business operators. According to him, this would help alleviate the suffering of the people, and improve the nation’s overall macroeconomic environment.

“We are concerned with the purchasing power of the people in terms of goods and services, which have been seriously affected by the value of Naira due to increase in tariffs, rates and other government policies.

“We urge the government to do more to lessen the burden in the business operators in the country, so that individuals, entrepreneurs and companies would make more profit.”

Furthermore, he stressed the need for government to intensify efforts in the areas of decongesting the Lagos ports, to reduce cost of production and rising inflation.

“Nigeria requires huge infrastructural improvements in power, road, rail and air. With an improved road and rail transport system, there will be an improvement in locally-produced goods and services which would contribute more to the GDP.”

He continued: “But the question is: how visible is the promise to link all the state capitals through rail? For this to happen, our budget needs more allocation for better funding because reliance on loans alone may not help us.

“But if properly funded and implemented, finished goods will be transported through the rails and maintenance costs on the roads will be drastically reduced.

“More so, we expect the full demutualisation of the NSE to usher in more opportunities for bigger investments, standardisation of policies and increase investors’ confidence in the market.” He applauded the Central Banks of Nigeria (CBN’s) plan to consolidate the banking sector, noting that Nigerian banks need to retool to better serve the needs and improve service delivery to the people.