A senior partner at Biodun Adedipe & Co, Dr. Abiodun Adedipe during the weekend in Lagos expressed that major sectors such as agriculture, power, and real estate that drive Gross Domestic Product (GDP) growth are not well represented in the capital market.
Speaking at the 11th annual conference, Investiture of Fellows, Inductions of Associates, and Annual General Meeting of the Institute of Capital Market Registrars, he revealed that the current performance of the Nigerian capital market bears no reflection on the GDP growth.
While speaking at the conference which was tagged, “Sustainability of the Nigerian Capital Market as a catalyst for Economic Growth and Prosperity,” he said the common assumption that the stock market and economic move in concert has weakened in recent times, stating that critical sectors that largely contribute between 70 per cent to 85 per cent of the Nigerian GDP are yet to be incorporated into the Nigerian Capital Market.
He said, “In fact, movements in the market and the economy are no longer synchronized because they do that for just a while and thereafter they diverge.
“I found a very weak correlation between the movement’s growth of the major metrics in our stock market, with the growth of our GDP, very weak and negative co-variance. The market capitalization is less than 10 per cent of GDP. In some jurisdictions, you see it up to two 250 per cent and 300 per cent.
“The relative size of the market against the economy. Some of the major sectors that contribute the most to GDP are not well represented in this capital market.
“I found six sectors in our economy and I’ve got to tell you when they’re figures together between 77 per cent and 82 percent of our GDP, and that is agricultural, trade, ICT and then take manufacturing.
“Then we will take mining, quarrying, and real estate. If you check your data, those six sectors contributed between 77 per cent and 82 per cent of Nigerian GDP.”
Speaking on the topic, “Role of Digital Technology in the Nigerian Capital Market”, the Chief Executive Officer of the Nigeran Exchange Limited (NGX), Temi Popoola, said the country and the globe have made huge progress in digitalisation.
According to him, “When we talk about digitalization, for example, it’s important to realize that we made a lot of progress, both globally and also in Nigeria. It’s over 25 years now that the capital market globally has been paying attention to technology.”
He added that,“Once COVID kicked in for almost three years, there was no single physical trading on the floor of the Nigerian Stock Exchange in our country.
“They were all digital, no human sort of real physical contact, and there was not a single day of downtime.”
On his part, the Chairman of Chams Plc, Sir Ademola Aladekomo said there was a mismatch between the claim of 50 million investors in the Nigerian Capital Market and the performance of the market itself.
Whilst quoting data from a Straw poll conducted by Chams Plc, Aladekomo said proper identity management of the investors in the capital market would lead to tremendous growth.
He added that the paid dividend is just about N180bn, which was only about 5 per cent of the dividend issued annually is discouraging investors from pursuing it.
He said the investors are not interested because the figures are widely huge and not with pursuing.
He also explained that the investors found the KYC process too tedious and not simplified, especially for those who had shared, using different at different companies.
Aladekomo further advised the regulators to find strategies to bring tech companies that would entice the millennials into investing in the Nigerian capital market.
