A four-man Panel has identified the ongoing impacts of COVID-19 on the activities in the Nigerian Capital Market, the effects on stakeholders in the ecosystem and the way forward as the pandemic continues to militate against transactions on the market.
Specifically, the Panelists’ virtual discussion, titled “Mitigating The Impact of COVID-19 on The Capital Market “, brought into fore the negative impacts of the pandemic on the investors, Capital Market Operators (CMOs) and expectations from the government and capital market regulators, including the need to put recapitalization of stockbroking firms on hold.
“ With COVID-19, the situation would have been worst but for market resilience. Also, our seamless transition to online trading has validated the strength of The Nigerian Stock Exchange’s Business Continuity Policy. But COVID-19 pandemic is not without its challenges. Purchasing power of investors has reduced with attendant dwindling income prospects for the Capital Market Operators.The tough operating environment has worsened funding challenges for the Chartered Institute of Stockbrokers (CIS) while the Institute’s Capital Market literacy drive is already threatened.
“ Given the importance of the capital market to Nigeria’s economy, the Federal Government should treat the market as a priority sector with regard to Covid-19 alleviation strategies. In view of the existing major constraints with regard to trading liquidity, the Central Bank of Nigeria (CBN) should formulate policies that will drive more liquidity into the hands of CMOs, especially equity traders. Stability and growth of the equity market will catalyze overall market rebound and economic growth.
“ We can start with Banks, giving significant concessions to CMOs through margin facilities and other lines of credits for trading. Restore banking stocks to marginable stocks list, with strengthened guidelines.Regulators should suspend any plans for recapitalization, for now.
COVID-19 has shown that its possible to run a 100% e-brokerage without the need for a physical location.The industry as a whole needs to work together to make this happen.This has tremendous advantage regarding cost savings and spread of clientele to remote locations”, said CIS’ President, Mr Olatunde Amolegbe.
Corroborating him, the former Director General of Securities and Exchange Commission (SEC), Dr Suleyman Ndanusa, urged the government to deploy resources to the pressing needs of stakeholders.
“ The Regulator must be ready to take actions on numerous fronts to address the emerging risks and challenges posed by COVID-19. Since those risks and challenges continue to evolve, it is important that the regulator continue to devote its resources to the most pressing issues faced by Investors, market participants and the market more broadly. There is a need for enhanced collaborations with all stakeholders and other financial sector regulators for a more coordinated response.There is also a need for more incentives to encourage both SMEs and large private companies and government privatized entities to be listed. Government should evolve more policies on improving ease of doing business in Nigeria and other macro-economic policies that will attract more foreign portfolio and Direct Investments into Nigeria.”, Ndanusa said.
In a similar vein, Professor Wilson Herbert of Federal University, Otuoke explained that there was a need for market research to elicit and analyse Covid-19 related data and how they fuel market reaction. According to him, the market requires comprehensive enlightenment programme on the implications of Covid-19 for investment decision on capital market. The Webinar, organised by the Association of Capital Market Academics of Nigeria (ACMA), as part of the Association’s contribution towards market development, was moderated by Professor Uche Uwaleke of Nassarawa State University.