Limited instruments on offer at Nigeria’s capital market impacting participation
Adesola Afolabi was a businessamlive reporter and Head of Financial desk.
Teslim Shitta-Bey, managing consultant, Alsthom Group, Thursday said a dearth of a variety of instruments on offer at the Nigerian capital market is impacting active participation, as the narrow instruments make the market unexciting and less attractive for increased participation especially from the youths that constitute 60-65 percent of the population.
Shitta-Bey, a guest speaker at the May edition of business a.m./GTI Finance & Investment Dialogue series in Lagos, indicated that foreign portfolio investors and only a few domestic investors are the major participants in the Nigerian capital market.
Speaking to the theme, “Making our Capital Market Great Again-Initiatives for Increased Participation”, he noted that Nigeria’s huge population, which is a tremendous potential, is largely untapped.
He decried the lack of strategy in nurturing teenagers on investment and financial literacy.
The investment consultant said that educating and igniting the interest of the Nigerian teenagers through well-diversified products to meet the needs of the millennials would be a catalyst towards deepening the capital market.
He, therefore, advocated for children to develop savings and investment skills through parents taking the steps to invest for them, show and teach them so that they can understand the culture of savings and investment better.
He also said that fiscal and monetary policies must be coordinated for investment and economy growth.
“1983 and 1984 models cannot be used in 2019. The patient dog doesn’t eat the fattest bone anymore, it dies of starvation. We have to be proactive in thinking”
“The management of our economy is promoted in such a way that it can not develop the capital market,” he noted.
Shitta-Bey thus called for some trade-offs between the monetary and fiscal authorities. He said we must determine what is more important for sustainable growth.
“Should we be controlling inflation at the expense of growing unemployment, or can fiscal revenue be generated after mid-term
re-inflation of the economy?” He queried.
Ideally, a capital market, which is a barometer for measuring the economy, comprised of the stock market, where equities are traded, the commodity market for exchange of goods, the mortgage market for housing investments, the mutual funds – a pool of diverse investment opportunities and the bond market for trading long-term financial instruments.
The consensus at the dialogue is that understanding financial literacy must go beyond lessons at schools to homes, religious organizations, etc. and that government, on the other hand, must create a conducive environment that promotes participation in the capital market.