The capital market has been on a bearish trend and stakeholders have not had the best of times recently. In an attempt to x-ray the causes of this problem, Guardian reports that some stakeholders have come up with an explanation for what and who is at fault for poor capital market performance.
In the comments made by 3 of the stakeholders in the capital market, the blame seems to lie at the feet of the Central Bank of Nigeria (CBN), whose policies, they say have been inimical to growth of the capital market.
The Managing Director of Highcap Securities Limited, David Adonri, explained that Nigeria’s economic woes are holding on because the fiscal authorities have failed to develop and implement policies that would boost the supply side of the economy.
This, according to him, is affecting the real sector, especially in the production of goods and services, which is having a multiplier effect on the stock market. “If the supply side is not working, there would be scarcity which is adversely affecting the stock market. The circular in flow of money presently is affecting the equities market.”
Specifically pointing to the recent decision to retain interest rate at 14%, others argued that this was a disincentive to both local and foreign investment in the capital market. “Government policies are always detrimental to investors. Retaining Interest rate at 14 percent would attract investment to the money market and make the capital market less attractive which would further depress the market.” Timothy Olufemi, the Managing Director of Renaissance Shareholders Association of Nigeria told Guardian.
Also speaking along the same lines, he National President Constance Shareholders’ Association of Nigeria, Shehu Mallam Mikail explained that government policies are stifling the growth of the capital markets, as the equities markets are now less attractive than the money market. In addition, he said that the interest rates are discouraging diversification as companies need capital to invest in new operations, but cannot meet the high interest rate in place currently.
Parts of this article originally appeared in Guardian Newspapers
