Nigeria: Regulators to restore confidence

  1. Posted on Thursday 17 September 2009 - 09:25
    Tom Minney
    Image of Tom Minney
    Tom Minney, AfricaNews reporter in Addis Ababa, Ethiopia
    Regulators and players in the Nigerian capital markets hope recent actions against five banks will restore confidence in the market, reported Africancapitalmarketsnews.com.
    nigerian_stock_exchange
    The Securities and Exchange Commission (SEC) has indicated that investigations continue into securities trading firms, after the Central Bank of Nigeria (CBN) sacked the chief executives and executive directors of five banks and briefly suspended trading in their shares in a bid to avoid banking crisis.

    As the CBN Governor Sanusi Lamido Sanusi and five appointed replacement bank directors visited the Nigerian Stock Exchange (NSE) on 16 September, the overall index stood at around 21,090 and market capitalization was N4,843 billion (US$31.5 billion), down 18.5% from 25,865 (index) and N5,887 billion (market capitalization) at the start of August. Market capitalization was reportedly N12 trillion ($78 billion) last year.

    Liquidity was also down as the banking sector is a key part of market activity.

    Acting SEC Director General Daisy Ekineh told journalists last weekend that current reforms in the banking sector will help strengthen confidence in the market. "I am confident that the market will recover ultimately. What the market actually wants is confidence and once this is assured it will ultimately return back. What is happening in the banks will ultimately strengthen confidence in the market," Ekineh said in a report by the Daily Trust.

    Farida Waziri, chair of the Economic and Financial Crimes Commission (EFCC), represented by Bala Sanga, her principal staff assistant, was reported by This Day newspaper to have said in a presentation - titled "Barbarians within the Gates: The EFCC, Criminal Loans And Tax Evasion" - that the crash in share prices on the NSE was not linked to the global financial meltdown but by the high level of insider trading and other malpractices perpetrated by some stockbrokers, a few boardroom criminals and other collaborators.

    The clean up was a joint effort of an investigating team comprising the SEC, the EFCC, the CBN and Nigeria Deposit Insurance Corporation (NDIC). Ekineh was reported to say the SEC had been instrumental in probing capital market transactions linked to the investigations.

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