Tuesday, 15 September 2015

How Capital Market REFORMS saved Nigeria from the worst effects of the global financial crisis.

  1. Problem: The bank recapitalisation exercise of 2004 occasioned unnatural growth pattern in the Nigerian capital market. Between 2008 and 2009, the capital market lost more than 70% of its value. By 2009, new issues had fallen by 94%.

    Reform Actions:
    Restoring Investor Confidence through an Investor Protection Scheme
    Deepening and Broadening the Capital Market
    Restoring Market Integrity by establishing a strong enforcement framework
    Strengthening the Market and Mitigating Systemic Risk
    Leveraging on Technology
    Strengthening Disclosure and Transparency
    Promoting Good Corporate Governance
    Better Governance and Infrastructure of Security Exchanges
    Investor Education
    Demutualisation of the Exchange

  • Main Achievements: The reform in the administration and supervision of the capital market saved Nigeria from the worst effects of the global financial crisis. Nigeria’s stock market return of 47% in 2013 was the best in Africa. Market capitalisation grew from N1.4 trillion in 2003 to N13.2 trillion in 2013 and investor confidence is fast returning following the global economic downturn of recent years.

    Key Challenges: the enforcement of regulations is still weak and the oversight of brokers and dealers is inadequate. There is limited capacity to track and monitor market activity and structural problems affect the Commission’s output. Overall though, this is a success story worth studying, documenting and celebrating. 

    Reference:  Public Service Reforms in Nigeria (1999-2014) - A Comprehensive Review

    Click to view Compendium 

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