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