Nigerian SE may be privatised

The Nigerian Stock Exchange ( could be up for restructuring into a corporation through a demutualization process, and foreign exchanges may be invited to invest. Ms Arunma Oteh, Director General of the Securities and Exchange Commission (, according to the local Leadership newspaper (, on 3 September said the strategy is that the SEC will bring in “a first-class team” to run the exchange: “What we expect is the principal officers will come onboard, at the latest, in the beginning of next year. After they come onboard, what we intend to do is to put in place a timeline for demutualization.”
As reported in this blog, on 4 August the SEC removed Prof Ndi Okereke-Onyiuke from her post as NSE Director-General and told Alhaji Aliko Dangote to stop acting as the exchange’s president. Mr. Dangote, head of a business conglomerate, is one of Africa’ richest men.
The regulator appointed the former chief executive of audit firm Deloitte in West and Central Africa, Emmanuel Ikazaboh, as interim manager of the NSE.
Ms. Oteh reportedly said recently in London that one model that is “fascinating” is the deal between Brazil’s BM&FBovespa exchange ( and the Chicago Mercantile Exchange ( “CME got to invest in Bovespa and vice-versa, Bovespa got to invest in CME. We thought that demutualization process is extremely successful, so it’s one of the models we’re looking at,” she said. However, the SEC is also considering involving other exchanges and noted that the NSE’s technology needs to be updated.
She said the SEC will be tough against fraud and cases of insider trading and share-price manipulation, factors which are seen to have caused the bubble and the ensuing fall in the Nigerian stock market last year: “As a regulator, we have zero tolerance for anything that is improper.”
According to Leadership, data from market-data provider Factset shows the Nigerian All-Share Index fell 70% from a high of 66,371.2 in March 2008 to a low of 19803.6 in March 2009. This year the index has climbed from around 20,000 as far at 28,029 in April, but on 7 September closed at 23,957.
Ms. Oteh said she expects more asset classes to be traded in Nigeria and hopes for a vibrant fixed-income market. The Government has reportedly removed a tax difference which favoured sovereign bonds over corporate bonds. “Other products that we hope to focus on our exchange are exchange-traded funds and Islamic funds, given that our country is at least 50% Islamic.”
She is also expecting more domestic and foreign companies to list on the NSE: “We have a petroleum industry bill that will go through the National Assembly very soon. We expect that to create an opportunity for the national petroleum company to list as part of joint ventures with Shell, Mobil or other international oil companies on the exchange,” she said.
“There is an initiative to encourage telecommunications companies to list in the market. So we can see companies like MTN, which makes 40% of their worldwide profits in Nigeria, potentially having an opportunity to list on the market. We can see companies like Bharti, which has acquired assets across Africa, to look at also listing on the market.”
The NSE Council is also investigating closing 5 out of 11 regional branches of the NSE in order to slash costs due to lower trading values. Reportedly the Council recently sacked 95 of the senior staff.
The six remaining branches would reflect the geo-political zones of the country. According to reports, some of the branches were opened more for political reasons, said a source: “In most cases the state governments built the structures and handed them over to the Stock Exchange to manage with the Exchange bearing the cost of running those branches. Unfortunately, virtually all of the branches turned out to be shadows in trading activities.”
The NSE has its trading floor in Lagos, but each branch also has an automated trading floor.


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