PROFITING PARTICIPATING

Flooding the Unusual MarketInflux of investors into the Nigerian stock market defies class categorisation and causes a progressional surge in trading of stocksBy EHIMARE OSEGHALE

As a trained civil engineer, Bayo Oribamise was contented with eking out a living from his profession until he attended a seminar on the capital market and its operations. It made an indelible impact on him. Today, he has become a keen investor in most of the blue-chip companies and a guru of some sort in analysing the movement of stock to the point that even the best from ivy league business schools would go green with envy. To give expression to his new pastime and, perhaps, tell others about the benefits inherent in the capital market, Oribamise has established a company where he offers services to willing and would-be investors in the capital market. His explanation is more telling: “I became more interested in it when I discovered that returns on deposit in the bank were becoming unattractive, coupled with the distress in the banking industry, which led to some customers’ money being trapped. Higher returns are easily made on investment in the capital market than in the money market”.Like Oribamise, the story of Odeyemi Oluwole is just as captivating. Oluwole, who is affectionately called ‘Investor’ by his friends and associates, was a staff of United Bank for Africa until he lost his job. “I thought about what to do. I tried my hands on contracts and all that. It wasn’t easy. Then I realised that there is more to be made from buying and selling shares if you understand the procedure and the dynamics of the market”. Today, Oluwole is neck deep in buying and selling shares from which he is making a fortune.If working in a stockbroking firm was what spurred Leke Ojabowale, a chartered accountant, into stock business, the story of Mary Uduehi, a petty trader who sells fruits at Ketu market, is intriguing. Uduehi was counselled by a stockbroker on the need for her to invest her monthly collection, esusu, on stock. Though she was initially reluctant, she later gave it a try and, today, she has not only become a shrewd investor but has also led many of her friends and relatives into the business. This quartet is just a few of the many Nigerians who have embraced the business of buying and selling stock as a way of making more money.The truth really is that more Nigerians, male and female, young and old, literate or uneducated, have become more interested in the activities of the capital market. This, no doubt, has led to the growth in the volume of businesses of the Nigerian Stock Exchange, NSE. But what has brought about this development? One of those who should know is Oladipo Aina, president, Chartered Institute of Stockbrokers. He attributes it to the introduction of the Central Securities Clearing System, CSCS. The CSCS, a subsidiary of the NSE, has made transactions in the market a lot easier than before. With the CSCS, the limited liability companies operate a computerised depository, clearing, settlement and delivery system for transactions in shares listed on the NSE. “If you buy shares today (Monday), you can sell on Friday of the same week, unlike what we used to experience in the past when transactions took weeks”, Aina said.Again, Aina said the CSCS e-certificate has enhanced the express delivery of share certificates to investors unlike in the past when it took a longer time for investors, to get their share certificates which sometimes got missing in transit. According to him, the awareness that has been created by the NSE, the Securities and Exchange Commission, SEC, and the issuers, that is, companies selling the public offer, have been pivotal in attracting people to the stock business.This view tallies with that of Oribamise who became a keen investor during the consolidation in the banking industry. With banks given a specific period to meet the N25 billion minimum capital base, most banks approached NSE to raise the money through initial public offer, IPO. At the heat of the consolidation, Zenith Bank and Guaranty Trust Bank, which were the first set of banks to offer their shares for sale, engaged in intensive advertising campaigns that aroused the interest of those who ordinarily had no interest in the goings-on in the stock market. The banks practically took advertising to the next level by placing wrap-around in newspapers and magazines. There was also massive publicity through billboards, radio jingles, television commercials and other below-the-line advertising — posters, flyers and SMS messages to reach potential subscribers. The competition was so stiff that other banks which followed suit tried to outdo one another in their efforts to raise the stipulated N25 billion. Even players in other sectors such as May and Baker, Dangote Sugar Refinery and Transcorp also followed suit. Transcorp expanded the frontiers by engaging in road shows in Lagos, Ibadan and many other big cities while using popular music star, Daddy Showkey, a symbol of grass-to-grace prosperity, in its advertising campaigns.Apart from this, NSE, led by its director-general, Ndidi Okereke-Onyiuke, has also been involved in road shows in Europe and United States to draw attention to the activities of the capital market in Nigeria. Shola Oni, spokesman for NSE, says it has greatly encouraged foreigners as well as Nigerians in diaspora, to invest in the capital market. “Nigerians in diaspora and foreign investors are now more aware of the high returns in Nigeria’s capital market,” he said.Evidently, this awareness has led to the over-subscription of some initial offers by some of the companies. For instance, Dangote Sugar Refinery’s IPO was oversubscribed by over 300 per cent. Aliko Dangote, chairman of Dangote Group of Companies, said: “There is clear and ample evidence that confidence in Nigeria is rising”. May and Baker, a player in the health sector, and Intercontinental Bank were also oversubscribed.No doubt, the growth in the capital market in the last couple of years has been overwhelming. According to the NSE annual reports and accounts, in 2004, the market capitalisation was N2.1 trillion. In 2005 it was N2.9 trillion but rose to N5.12 trillion in 2006, representing a growth of 76.5 per cent. For the value of shares traded, 225.8 billion shares were bought and sold in 2004, while in 2005, it was 262.9 billion. But the figure rose to 470.25 billion, representing 78.8 per cent growth in 2006. In terms of new issues approved, 235.53 billion shares were approved as new issues in 2004, 730.54 billion in 2005, and 1.41 trillion in 2006, which represent 93 per cent growth. For the volume of shares traded, it was 19.2 billion in 2004, 26.7 billion in 2005 while 36.76 billion volumes of shares were traded in 2006, a growth rate of 37.8 per cent. The daily average number of shares traded has also increased. In 2004, it was 75 million units; it rose to 107.6 million units in 2005 but jumped to 159.9 million units in 2006, an increase of 40.2 per cent. The number of listed securities has also increased from 276 in 2004 to 285 in 2005, and 288 in 2006. But despite this, Ojabowale says Nigerians have not taken full advantage of the capital market. According to him, except in purchase of equity, most other products such as bond and derivatives have not been embraced by Nigerians. “Activities at the stock exchange are still low. The market needs to be made more vibrant. You cannot compare NSE with the stock exchange in South Africa. We still have a lot to learn from these countries,” he said. He is optimistic that with the federal government reforms which have led more private companies to be listed on the stock exchange, the future of the capital market in Nigeria remains very bright. “We are looking at a time when the capital market will have the depth and breadth of securities that are tradable, a time when Nigerians will not look at the capital market for trading in shares alone but for other products such as bonds and derivatives.” For those who are still sceptical about investing in shares, Oribamise urged them to give it a try. “You can only suffer some temporary setback but you cannot lose completely,” he said. Truly, there are times when quoted companies and their shareholders suffer losses. But some companies in this category do rebound and the investors regain their confidence. At other times, the authorities rise in defence of the shareholder when the investment is threatened by crisis at the company.That was what happened recently with the announcement that subscribers to the aborted shares of Aviation Development Company, ADC, which was cancelled following the withdrawal of the airline’s operating licence, would get the refund of their money. ADC had offered for sale 1.2 billion ordinary shares of 50 kobo each at N1.00 per share and 1.2 billion floating rate convertible preference shares of 50 kobo each at N1.00 per share. But with the crash of one of its aircraft which resulted in the death of 96 persons and the revocation of its licence by the federal government, subscribers were worried over the fate of their investments. But the issuing house, Capital Bancorp, allayed investors’ fears. “Some of the investors wrote the SEC, asking for a refund and as a result of this, we met with ADC and SEC before we agreed that it is better we refund the money because we realised their feelings are natural,” said Tola Mobolurin, managing director of Capital Bancorp . But as more Nigerians embrace the capital market, Akintunde Asalu, president, Nigeria Shareholders Solidarity Association, NSSA, says investors should be cautious in their choice of stockbrokers. “They have caused a lot of investors not only nagging headaches but also gnashing of teeth. You ask them to buy something for you. Whether deliberately or otherwise, you could wait until it is convenient for them, not knowing that time is of essence when you want to buy stock”. He added, “If you don’t buy at the right time, you lose and when you place an order, it’s because the time is right. But I believe that many stockbrokers don’t know the implications of this”. Asalu, founder of NSSA, started buying shares in 1963 with 10 units of Daily Times. From then on, he has been hooked to stock until he invested in more than half of the companies quoted on the stock exchange. All he does now is monitor the growth of his investment and earn dividend. But when asked how much he is worth, Asalu went arithmetic: “I calculate what I’m worth in shares. I use the prices of quoted stocks at the last trading day of the year as the basis of multiplying how much in each company and total it up.” Surely, with the current trend, more Nigerians are set to join Asalu in quantifying their worth by the value of shares they have.Additional report byABIOLA ODUTOLA© 2007 Tell Communications Ltd. All rights reserved.

Nigeria’s Ballots Scandal Dominate S/African Media
04.27.2007

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South African newspapers led by the Mail and the Guardian, yesterday carried damning reports about how South African companies were asked by Nigerian authorities at the eleventh hour to print ballot papers that often did not reach polling stations back in Nigeria in time.
The reports quoted a local printer who declined a request four days ahead of the poll to print the bulk of the presidential ballots, as there was not enough time to do a proper job. Three other local companies printed the ballots, but did not add time-consuming security features.
The presidential election, held in tandem with federal legislative elections last Saturday, was won overwhelmingly by Umaru Yar'Adua, the ruling-party candidate and hand-chosen successor of outgoing President Olusegun Obasanjo.
The reports said the last-minute printing rush in South Africa flowed from the Independent National Electoral Commission,s (INEC) initial barring of Vice President Atiku Abubakar the Action Congress (AC) candidate and his clearance on Monday last week, five days before the elections by the Supreme Court.
According to the stories, local printer Lithotech, whose South African division supplied 100-million ballot papers for the Nigerian state elections a week before the presidential and federal elections, "confirmed this week that it was invited on Tuesday last week to reprint 40-million presidential ballot papers to include Abubakar's name. Nigeria has 61-million registered voters."
Lithotech group development market manager Ben Sachs reportedly said the company "declined the offer to print within the short time-frame as air-freight availability and production time (were) not sufficient and the requirement could not be met". He said Lithotech "would never entertain accepting a contract where the risk of non-compliance as required in this instance is so high".
The Mail and Guardian hinted that three other printers -- Media24-owned Paarl Printers; Formeset, which handles large South African government orders; and Ren-form, which has ballot supply experience -- were then asked by Nigerian authorities to supply the entire requirement, to be delivered to Nigeria by no later than Friday, the day before the elections.
The reports claimed the ballots were printed without counterfoils and serial numbers -- features usually included to establish an audit trail.
Paarl Print MD Mike Ehret confirmed the print order came on Tuesday. "Sure, we were under a lot of pressure, but it was a professional experience."
Ren-form manager Jean-Pierre du Sart said his company started printing on Tuesday evening and delivered locally Thursday evening. He said Ren-form had provided a "packing list" and labelled pallets to help establish an audit trail, but that serial numbers would have taken too long. "If we had put on serial numbers, I don't think the election would have taken place." Du Sart added that "it must have been a logistical nightmare to distribute ballots to even the most remote areas in Nigeria ".