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As Nigerian commercial banks continue to roll out plans to surpass the new capital threshold introduced by the Central Bank of Nigeria, Nik Ogbuile wonders whether  we still have the beauty of a dependable capital market industry and the attendant stock market administration that can offer the structures that can sweep every share presented, either for subscription or rights like the scenario that presented itself in 2006

Recent developments in the monetary and fiscal policy space have indicated that the banking sector must rise above its current status if the country’s economy must leverage its efforts for any sustainable growth.

Negative reactions to the new position of the Central Bank of Nigeria (CBN) is not different from the same reaction experienced during the first round of the capitalisation exercise in 2005 which offered the Nigerian banking sector the opportunity to optimise its effectiveness in financial intermediation roles. The fact remains that people and institutions most of the time do not want a change because they are not sure of the effects.

Considering the facts of the obvious advantages of the first recapitalisation, it could be adequate to assume that this second phase of the recapitalisation exercise will further optimize the efficacy of recapitalization in a fledgling economy which needs a virile financial sector to achieve reasonable growth and development. In the real sense of development economics, “money is what money can buy”.

Apart from its deep meaning in reaction to the value of money, it also offers some insight into the quantity of money. If 89 banks in 2005 could not collectively afford to finance quality health institutions, finance standard tertiary institutions or afford to fund one or two medium size refineries, it means that the existence of those banks are not useful to that economy. Maybe in the present development, the existing 35 commercial and merchant banks have found themselves in the same position of the 89 banks, even with their recapitalized status which offered each of them the privilege of doing business with not less than N30 billion post- recapitalizations.

That is how we got to a position where the money within our banking system has largely remained inadequate for what it can buy. So welcome to Olayemi Cardoso’s new call for us to revisit an action which he watched from the sidelines after exiting the core financial sector before the exercise. The finance prodigy feels that his constituency has become so livid with big ticket activities in the economy and needed to rally around to offer support. The inability of Nigerian banks to be of reasonable need to the just completed Dangote Petrochemical project is a very sure drive for this call.

Already, a good number of banks have moved on to roll out their plans to surpass the Cardoso guideline. But the matter is not in the roll-out. The matter lies more in the probability of achieving a huge response and result, just like were witnessed in 2006. Do we still have the beauty of a dependable capital market industry and the attendant stock market administration that can offer the structures that can sweep every share presented, either for subscription or rights like a cyclone in the doldrums?

How ready is the market positioned to offer major supports to enable the banks achieve the goal or engage the investors across the globe to buy into the revolution which is a direct invitation to foreigners to consider the Nigerian market once again? This becomes very important based on the fact that President Bola Tinubu has softened the effort to woe investors and a follow-up could be initiated with this new investment window, considering the fact that the industry will need to raise as much as N15 trillion to make the exercise very successful if we want to avoid another round of failed banks or legacy banks conundrum which echoes are still reverberating and remain part of the miasma in the financial sector.


As a matter of consequence, the Nigerian Insurance Deposit Corporation (NDIC) still has very sour tales on, failed banks for Nigerians, with its failed payments growing in large digits every month, as it could not even settle the claims made by verified deposits from 22 banks many years ago.

Nigerians can remember vividly how the “Old” Nigerian Stock Exchange (NSE), managed by Professor Ndi Okereke-Onyiuke as the Director-General, and a group of top market operators and staff, took the Nigerian market by storm and effected a positive reaction on Nigerians to create the Nigerian capital market as a major investment window into the economy. Roadshows were initiated across the country and beyond, to the extent that relevant messages were built. Nigerians did not buy bank shares alone. The messages purposely created overflow interests which snowballed into other equities that created a N13 trillion capitalisation for the Nigerian capital market from about N6 trillion within a small space of time.

The NSE efforts did not just enrich the banks, brokers, issuing houses and shareholders, it was a win-win for Nigerians and other investors who now leveraged on the communication sent out to the world. Prior to the Ndi Okereke-Onyiuke global investment campaign that was a major road-show across the major exchanges, her contemporaries at the New York Stock Exchange and other markets had offered great support to the initiative. 

Also, apart from the razzmatazz created by the shows, her acknowledged capacity as a globally renowned market operator and administrator, the level of transparency which she brought to the NSE created a whole lot of trust since the business of stocks and shares has a lot to do with transparency and corporate governance indications. At the end of the entire projects, Nigerian banks became so satisfied, investors multiplied in their numbers, the stock market boomed and the banking sector was cleansed as appendages of families. Annual meetings of banks became a bazar of some sort, as many Nigerians became part of the people creating value for the Nigerian economy.

Research materials trailing the very successful banking sector reforms of the 2005 are awash with the efforts indicating that the capital market which was little known for huge capital syndication than mobilising peanuts from leftovers has set a new financing option for development in the country. There was the initial fear that the kind of money needed cannot be fully raised from the domestic economy, neither can the foreign investors be of optimum use to achieve the desired targets.

It wrote, “Credit to this feat goes to the kind of management that the Nigerian Stock Exchange (NSE) had at the time. Suffice it to say that the NSE management between 2005 and 2008 was robust, focused and goals-driven. The capacity of the then NSE to mobilise ‘hidden-fund-holders’ and unwilling equity investors, and even market women to buy into the new investment opportunities in banks was the main success story of the new banking structure opportunities. With road-shows and allied mega-marketing mix applied by the NSE, the consolidation looked so easy and cheap to achieve.


Today, the efforts of the CBN and the support of the Professor Ndi-Okereke-Onyiuke team would be said to have been as good as deserving the credit that goes with the banking sector reform successes. Her ability to have developed an Exchange with nearly N14 trillion capitalization was the main impetus for the entire breakthrough in the new capital raising by banks,” This was believed to have created an opportunity for the NSE to be praised for supporting the economy in special measures and creating new directions for new managers in many other strategic institutions of government.

A strategic industry publication on the historic consolidation has also indicated that, “If the NSE did not rise to the challenge of the revolution, there may have been a rapid re-colonisation of the Nigerian economy using the giant banking institutions across the globe, such as HSBC, Standard Chartered, Barclays, Credit Suise and other emerging market financial institutions that were already waiting in the wings to roll out their acquisition plans. Today, Nigerian Banks are stable, robust and efficient. Every good thing can now flow through it, because it has passed through the crucibles that can guarantee continuous growth”.


Financial experts believe that it is this “continuous growth” that Cardoso and his team have decided to achieve through this second recapitalization process which can only be better than the past if the capital market authorities can mobilize the market to play the role of educating and informing the investors at the right time. The current recapitalization could even be easier to meet if only half of the 2005 strategy of the former NSE was deployed based on the facts that most of the banks in question can meet more than half of the capitalization through the existing shareholders, while a quick mop-up from money bags would be achievable considering the kind of money in circulation and the fact that the growing profit level and income of banks make dividend pay-out a very attractive development today. Nigerians are really waiting, but it will not come with just the touch of a button.

The NGX has a very big role to play by morally asking Nigerians to choose investment in shares instead of investment in luxury acquisitions and leisure trips and other unnecessary social investments. No matter the extent the 2008 global financial squeeze affected investors, equity investors in banks were better because their share prices were so swift and values were better created which offered a good number of them to recoup their initial investments before the bubble burst in the capital market. Because the Nigerian capital market then was very transparent, investor knew what was happening at the global front right from the onset and were quick with hedges and recoveries. Although huge funds were lost, but the market remained appreciated by the numerous investors.

Lennox Mall

Looking at the Nigerian Exchange Limited (NGX), opportunities abound to it now as a quoted company for huge income, but such an income can only be made if it leverages the efforts of effective mobilization to generate huge interest. Nigerians generally believe that the present day NGX seems to be weaker than what the institution used to be, but there are strong indications that new ideas could be generated to seize the moments and help banks meet their targets through effective information, empower Nigerians and make their own money, as the case maybe.

The seeming weakness of the NGX may not be as a result of the current economic down-turn but the instability that has bugged the institution since 2010 which was principally caused by entrenched leadership which has finally resulted to a weird and skewed demutualization that has not really produced the essence of the phenomenon, thereby infusing a kind of subterfuge in the market. Nigerians deserve a capital market that will leverage existentialism instead of looking for new ideas from people and places that do not harbor any.


The established precedence of the old NSE could be seen to have possessed the advantage of experiential qualities without embarking of cul-de-sac, or wallowing in a blind alley. Nigerians are proud of their Exchange and can be happier if its present quality compares favourably with what they get from Johhannesburg (JSE), New York Stock Exchange (NYE), London Stock Exchange (LSE) and even the lesser Exchanges in Tokyo and Kenya.

What the NGX must do is to look into their archives and dust the documents containing the programmes deployed by the old NSE in all the capital raising efforts over time and see which style goes well with what is on ground now so that they can add some gusto to their activities to win more investors for banks and other stocks at this time. The NGX does not lose anything by approaching the superstars that ruled the NSE in the past for more ideas if that is something they need to do to achieve remarkable success. The ‘war’ for the occupation of the Stock exchange has been won and lost to the obvious detriment of the Nigerian economy, all of us that have some stakes at the Exchange are bound by our conscience to grow it, especially now that more opportunities beckon to improve it.


In other climes, the kind of epic strategy that was deployed by the Old NSE in pursuing market related activities would be preserved and made to win wild acceptance going forward, so that in times like this, what the NGX needs to do is to activate the program and come up with a sparkling performance. Over time, communications activities by the NGX have been low or largely unknown and that is an expression of a relaxed effort or aggression when compared with what investors used to know. The kind of lull that occurs at the Exchange this period has created an assumption that leaves many to develop cold feet to bring the NGX into any new scheme for vthe capital market. However, this very busy period for the capital market is good enough for the government and investor to really indicate the role of the NGX in this very important national development effort.

With over N22 trillion capitalisation, the NGX must be in the front seat while the chase for national economic development lasts. It is no more enough for it to wait for institutions and investor. They have to take the drive to the doorsteps of every indicative activity the way it used to be. If they have not rolled out additional support for the banks to make the recapitalisation successful, it means that they have not learnt much from the dynamic leadership displayed by its past leaders like Apostle Hayford Alile and Professor Ndi Okereke-Onyiuke. Nigeria needs very big banks with very huge capitalization and this is very possible.

Ogbulie is the Publisher and Executive Editor of Money Report.

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