After 106 years: Nigerian leaders fail to list a single firm on Stock Exchange

By Charles Abuede

• Since 1914 when journey started
• No ancient, no modern leaders understand how market works
• Experts say government companies or assets cannot be securitized
• Economists say shameful, point to shallow economic management
• Even ultra-conservative Saudi Arabia listed oil giant Aramco

One hundred and six (106) years since embryonic Nigeria began to form into the confusion that it has become today, the country’s extraordinarily conservative, ancient thinking, middle of the way thinkers and with some modicum of progressive economic minds have failed to see the need to wake up billions of dead capital held by the governments, local, state and federal, in form of assets by listing them at least on the domestic stock exchange.

The failure by successive governments, since 1914, but particularly after independence, to run a modern, forward thinking and progressive economy with a mind to grow asset value through the instrumentality of the stock market has left many economists asking the question: “Nigeria: What went wrong?”

They claim that the failure by successive governments, military, civilian, democratically elected or not, to understand the simple logic of turning numerous government holdings in the form of state-owned enterprises into financial instruments that the stock market can provide, has left many wondering what century the leadership got off the bus in this debilitating Nigerian journey to nothingness.

For decades, especially in the last 30 years, analysts say the country has found itself being led by journey men, pretenders to leadership, whether military or civilian, who saunter into government positions unprepared, without any plan or vision. They say they do a merry go-round, eat Nigeria’s best foods, drink Nigeria’s best drinks, enjoy the comfort of office, the luxurious accommodation provided by the Nigerian people; after which they leave the rest of the population short-changed by their incapacity to think great thoughts, do great things and dream great dreams for citizens and country.

One economist said it is baffling how, like the dead capital all over Nigeria, one aspect of which  Price Waterhouse Coopers(PwC) estimated at $900 billion in residential and agricultural real estates, government officials are unable to wake themselves up to see the impoverishment that they are subjecting the country and citizens to.

The extraordinary amount of $900 billion that PwC estimated was lying waste as dead capital, a term it said is used to describe assets that cannot be converted to economic capital, was not alarming enough for a broke Nigerian government to engage to see how this dead capital can be woken up. Analysts say they are not surprised, its typical of Nigerian governments, that when they don’t know, they won’t seek to know, so long as crude oil can still come from the ground and it is still been demanded, even if it is $5 a barrel!

The economist, Ayo Teriba, speaking last week at a webinar organised by the CIAPS and designed to examine states performance in the States Fiscal, Transparency and Accountability Programme-for-Results, drew attention to the woefulness of government to convert its assets to financial instruments through the stock exchange, wondering why it is that there is not a single Nigerian-government-owned business that is listed on the stock exchange anywhere in the world – not local government, not state, not federal – he admonished.

Indeed, since the pandemic made a touchdown in Nigeria, it has exposed the underbelly of the country’s and its leadership failings, especially in the area of healthcare, education, technology and many things that some oil rich countries like Nigeria now take for granted. The pandemic has clearly and further exposed the distance that truly exists between the citizens and their government.

The failure of managers of the economy over the years to make real progress with it is glaring in what Teriba described as the simple failure to understand the huge difference between market value and use value of assets. He said a modern government ought to seek always to know the market value of its assets, nothing that Nigeria has assets straddled all over but which amount to nought because they have not been brought to the market.

It is one of the reasons why economic and financial analysts have always called for the listing of big tickets government owned enterprises, especially entities like the Nigerian National Petroleum Corporation (NNPC), government stake in Nigeria LNG, among others, calls which have always fallen on deaf ears.

The over 60-year-old Nigerian Stock Exchange, has tried to entice government to list some of these enterprises without any success. Yet, Africa’s biggest economy by GDP size and the most populous stays stuck in the past, running an economy that is nearly all the time on empty.

The benefits of listing have been impressed on government at different forums, in particular, how it can be a catalyst for stability, and that such listing of state-owned enterprises will serve as a proper instrument for the broadening of shareholders’ base as well as deepening the market.

Dr Ayo Teriba, who is also CEO of Economic Associates, making a keynote presentation on the place of the states in the Nigerian economy during a virtual roundtable discussion hosted by CIAPS and monitored by Business A.M, stated that there is a need for governments in the country to financialise their assets by getting these firms quoted on the NSE for securitization purpose.

“Revenue from states has been declining; states should look inward to the revenue they can generate. Every state is viable and should therefore look into the strengths from sectoral revenue generation. A question we need to answer is how sensitive is the revenue generation of the government to lockdown over recession? The focus on the economy hangs on the overall sectoral performance and sectoral realities,” he said.

The economist highlighted that the state policy level concerns consolidating the status of the state as industrial and commercial hub and a centre of shared prosperity; the strategic development of natural resources endowments and infrastructure to underpin economic transformation in the state and become the centre of attractions in tourism and improved connectivity. He also stated that the development of human capital will aimed to deliver sustained improvements in productivity, livelihoods, inclusiveness, and well-being of the people by ensuring adequate investments in the education, health, productivity of all citizens, while protecting vulnerabilities of women, youths, and elderly; and finally, governance to provide the vision and leadership that will deliver sustainable and inclusive economic growth, fiscal self-sufficiency, highest wellbeing standards, and a legacy of good governance in the state.

Also speaking at the roundtable discussion organized by the Centre for International Advanced and Professional Studies (CIAPS), Phillip Isakpa, a financial journalist and the executive editor of Businessnewscorp, publishers of Business A.M., asserted that there exists a disconnect which has distanced the government from the governed. He was of the view that the government has no understanding of business and investments, hence the reason why we cannot point to a government-owned enterprise listed on the exchange.

“Government needs to deliberately implement the right framework for optimum performance. There is so much politics in place as everyone seeks personal interest as against the general interest. Fiscal Transparency, accountability and Sustainability (FTAS) are needed to drive growth and development in the economy. It is pertinent to note that we need to interrogate why some states are not acting in conformity to those criteria that can lead to getting a share from the national and international disbursements from multilateral lenders,” he emphasized.

Isakpa opined that Nigeria, as a country, needs to build on institutions and not personality to make economic progress.

Sharing the same view as Isakpa, YemiKolapo, the managing director of Point Newspaper, said the lack of capacity has led to the non-listing of government-owned enterprises on the local bourse.

“When you give incentive to states, you tell them to be more fiscal efficient but the management has been hit by flaws and the lack of capacity that has led to the non-floating of government-owned companies on the Nigerian Stock Exchange. Meanwhile, the private sector must be actively involved in the FTAS paradigm for grants, as well as encouraging states to block leakages to help in better fund management and enhancement of fiscal efficiency,” she explained.

Charting a way forward on the mantra that government leverage existing platform of investment opportunities to increase its generated revenue, Ayo Teriba asserted that the government will need to create online grid of investment opportunities, as well as an automated investment process. He also stated that there is a need to “optimize asset portfolio by closing the gaps between market values and use values as well as opening new streams of non-tax revenues; securitize assets by issuing asset-linked securities, either asset-based or asset-backed; Liberalize, privatize, and commercialize assets to close value gaps; Seek options for replacing high and costly debt with equity by making investible assets more visible to equity investors,” he advised.

Furthermore, he opined that the government needs strategic foresight on what projects to place, and where to place them to reduce the costs of connecting people, goods and data between places within and outside the states and unlock the economic benefits of agglomeration.

“Also, strategic roadmaps for placing projects to unlock agglomerative benefits in city centres, walkways, markets, parks, transit routes or points, and borders are some of the policy levels which the state needs to adopt for consolidating the state’s status as an industrial and commercial hub, as well as, creating the pathway for the floating of government-owned enterprises on the local bourse,” Teriba said.