Eze: Why offshore listing is good for Nigeria’s economy

The Managing Director, Crane Securities Limited, Mr. Mike Eze, in this interview  with CHRIS UGWU, speaks on issues bordering on stock broking in Nigeria and  other challenges in the nation’s capital market


For some years now, the stock exchange has been dominated by a few brokers – just about 10 out of over 200. Is the situation not abnormal?


It is not abnormal. You know, this is a market and when you get to the market, there are big players and small players.


Our own is corporate market, if you go to real sector you find out that there are companies that produce goods that cannot be compared with other companies because of their expansive nature. The same thing with stock broking; there should be big players and small players and all of them should operate in the same market.


Ten brokers that are dominating are playing according to their own capacity. The stock market is a barometer with which to measure the economy.


If the economy is doing well, you will see the market indices going up, if the economy is not doing well, the indices will be going down and, if you say it is only the 10 that are dominating that can operate, then the indices will not be realistic. And we can’t do without those small players because there are places those small players will go that the big ones won’t go.


The stock market is for everybody because it is an economic system.


With the emergence of NGX, activities in the market are still low, what is your take?


The expectations are high and have been high since demutualisation, but the NGX has just emerged and the emergence has its own advantages and disadvantages.


It is like when you are starting business, you employ capital and you are not expected to make profit in first and second year of production, but as time goes on, you begin to write off all the deficits you have incurred in the process of floating that company.


The expectations are high and you know all we have been seeing during the demutualisation are advantages, now the disadvantages are coming in, but there is a lot of investment into demutualisation.


So, in this first three years of operation, even the Corporate Affairs Commissions doesn’t charge tax for companies that are under three years of operation because they have invested money and they have to recoup that money.


They may not even make profit within the period. It is kudos to the system that NGX has emerged, it has been long overdue, now they are no longer a self-regulatory organisation, they are now a limited liability company, they can borrow money and they can also be listed on their own exchange

All these things involve a lot of cost, which can be recouped before you now see the gain. I think it is still in the right direction.


What do you think is responsible for the massive exodus of foreign investors from the exchange?


It is just a normal phenomenon, you know the market is like in and out. They will exit and others will still come in, and that they are going does not mean that they will not come back again. Foreign investors don’t care about your system, what they care about is profit making. They are exiting because they are not making money like before and you know our economy is down and they cannot con-

tinue in a country where they are not making profit, so, that is the basic reason why they are exiting.


What are the impacts of the rising forex on the exchanges?



It is taking its toll. Once you see dollar against naira going up, it means that people are disposing off their shares and moving into FX. So, it is taking a toll on the market, but it is tactical, people move in and out and the system has a lot to be blamed for it. Market is information-driven.


Now there is a lot of tension in the land, people have been panicking and there have been rumours of war all over the place. People are exiting the market and taking position in the FX in case anything happens so that they can easily move.


What are the challenges faced by the stock broking industry in Nigeria?


The pandemic, as you know, has posed several challenges to several sectors in the economy and the stockbroking sector is not an exception. Initially, it was a dilemma as it came suddenly.


You remember there was a total lockdown of the commercial nerve center of the country, Lagos, by the Federal Government. This did not go down well with the sector, as you very well know that a stock market is a day to day activity, but thank God for the foresight of the Nigerian Exchange Group.







In 2016, they had already put in place a policy, the minimum operating standard. By this policy, there are certain operational standards that stock broking firms must attain before they can be allowed to continue carrying out the functions they are lincenced to do, amongst which is remote trading.


Then the data backup and recovery policy, which must be cloud-based etc. These played out to the advantage of the sector and assisted in no small measure in seeing that the sector is still in business.


Apathy towards investment, cautious investment approach on the part of foreign investors, same with institutional investors, infrastructural problems, dependence on alternative means of power, epileptic communication system, etc are some of the difficulties encountered by the sector during this pandemic.


Inflation in Nigeria remains above the target range, what are the implications on the economy and CBN’s monetary policy?


Inflation is one of the economic indication, it is either a positive indicator or negative indicator, but in this case, if is going up, it is a hyper-inflation and is not good for the economy.


In the sense that it will affect per capital income for ordinary man in the country, it means that the prices of goods and services are getting high and goods are getting out of the reach of ordinary man.


Government actually is meant for ordinary man, but in this case, the rich now becomes the owner of the system because they are the ones who can afford the goods and services. Look at transportation for instance, that will show you why inflation jumped at that rate.


Transportation in a place where an ordinary Nigeria uses N150.00 but now uses about N400.00 to go, that’s one way, now going and coming within the same route now cost about N1000.00. that’s indication that there is hyperinflation in the system.


This was the reason in those days we had Udorji award. I think Udorji was a Permanent Secretary in the Ministry of Labour and Employment. He had to do a salary increase for civil servants because of this kind of inflation. Goods became out of reach for ordinary man and government was forced to increase salaries.


That worsened the situation anyway, because as you are increasing, the real sector are also increasing, because you cannot increase for civil servants and ask me who is trading garri not to increase the price of garri.


So, it becomes hyper-inflation. It is cyclical. So, that is the implication now and it behoves on government to come up with other economic policies through CBN who is in charge of monetary policy.


Do you think the offshore listing being embarked upon by some companies have a direct impact on the Nigeria economy?


Yes. You know, the implication of that is that the company is in Nigeria here and they are being listed abroad and ultimately, the proceeds will return to Nigeria in terms of foreign exchange and it becomes an inflow for us and that boosts our foreign exchange reserve.


The impact is that it is positive indication of capital inflow, because when you list, the ultimate aim is to earn income, it is more or less that you are selling something abroad and when you sell, you get income from the sale and that income, you don’t bank them abroad, you repatriate it back home. It is a good omen to our economy.


Is the adoption of a more flexible exchange rate policy by the Monetary Policy Committee (MPC) going to boost the Nigerian capital market and the economy?


Yes, even the former CBN governor attested to this in a recent interview.


He was saying that CBN should harmonise the exchange rate, because as we speak now, I think we have about three exchange rates operating in the same system, the highest being that of BDC. I think the harmonisation will be in the right direction and the impact will be felt all through the economy, capital market not excluded.


With the way things are, don’t you think stockbrokers need bailout for liquidity boost?


Bailout is a continuous system in any economy. If you look at any economic system, there is never a time you will not need a bailout. It is only the banking sector that has excess liquidity.


But for stock broking sector, there is always need for bailout. And you know COVID issues also called for bailout of the sector because there was a lot of squeeze during the height of the pandemic.

We need to inject funds into the system to make the system liquid again. You know, most companies have not been coming for listing and you know it is this listing that provides the liquidity in the stock broking system, hence it becomes imperative for injection of funds in the system by the Federal Government through CBN.


There is a strong need for bailout, especially now that some COVID-19 restrictions have been relaxed.


In what way can government help to revive the nation’s financial market, especially on the issue of identity management and other economic drivers?


Well, the essence of government is not only politics, but economy, but in Nigeria, the politics of governance overtakes every other things.


Left to them, management of economy should be left to private sector, which is not so. Government supposed to be the umpire in the whole system, the economic system notwithstanding, government supposed to be coming up with economic policies that will boost the system and keep the system working.


Because the essence of governance is for the benefit of generality of the people, particularly the common man in the street, because they are the ones that whatever is the harsh condition will affect at the end of the day.


So, government should come up with good policies. Fortunately, government has economic team being headed by the vice president. Sometimes last two years Charles Soludo and other doyens of economy were invited to be members, there was an excitement that government is thinking about the economy, but ever since then we have not seen the effect of these initiatives of government.


This is because of overconcentration on politics of governance, forgetting the economics of governance, because you must have a balance between the two and if possible, even allowing the economics of governance to overtake the politics of governance.


So, that is what we are facing. So, government should buckle up and ginger the economy the more. Nigeria is the greatest economy in Africa and is an economy that should not be toyed with, whatever affect the economy the economy of Nigeria overflows to other parts of Africa and the world at large.


Fortunately, we have a product that is in demand world over and, apart from Africa, the other part of the globe people are interested in Nigeria because we have a large market here.


So, government should be concerned about the economy so that Nigeria will continue to play the leading role in the economies of Africa and reasonable role in the economy of the world as well




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