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Landmark Judgement shakes tables at the Nigerian Stock Exchange

The Federal High Court declared that the NSE is a ‘public institution’ within the contemplation of the FOI Act.



Investors lose N713 billion in Nigerian Stock Exchange, Bargain hunting in stock market

The Nigerian Stock Exchange (NSE) may have a radical shift in its information release process if a recent Federal High Court ruling is to be complied with.

In its Judgement, the Federal High Court declared that the NSE is a ‘public institution’ within the contemplation of the FOI Act. On the basis of the affidavit evidence before it, the court also reasoned that it is in the interest of the public to disclose the affairs of an entity that has done business with the public and is alleged to have acted against the interest of the public.

The court also found that the Defendants (the NSE) could not legitimately enjoy the protection of section 14 of the FOI Act, and that the ‘public interest’, in the instant matter, far outweighs the interests of the clients of the Partnership Entities. The court consequently ordered the the NSE to deliver requested documents to the Plaintiffs within 7 days. With this judgement, the NSE and other securities exchanges operating in Nigeria’s capital market must now comply fully with the obligations placed on public institutions under the FOI Act. The NSE has complied with the aforesaid order of the court.

This court judgement has consequences of mega proportions and if it stands, could significantly affect the operations of the Nigerian Stock Exchange.

What led to the court case?

According to information made available to us by the plaintiff, Dr Ayibatonye Owei and his 4 children lost a significant sum to an unregistered investment product, Partnership Securities Deposit Account (PSDA), which was promoted by the Partnership Investment Company Limited and Partnership Securities Limited (the Partnership Entities).

In order to fully understand the nature and extent of the rights/reliefs of the Plaintiffs vis-à-vis the liability of the Partnership Entities, the Plaintiffs had, relying on the FOI Act, requested for certain information/documents, relating to the affairs of the relevant Partnership Entity from the Nigerian Stock Exchange (the NSE).

However, the NSE refused the Plaintiffs’ request for information on the grounds that the NSE is not subject to the FOI Act and therefore not under any obligation to honour the Plaintiffs’ request for information.

Last year, the Nigerian capital market was rocked with a scandal. A stockbroker, Mr Victor Ogiemwonyi was arraigned before a Federal High Court sitting in Lagos and remanded in Ikoyi prison.

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Mr Ogiemwonyi is the founder and MD of Partnership Securities Limited, a stockbroking firm on the Nigerian Stock Exchange that was accused of fraudulently selling shares belonging to his clients and misappropriating the proceeds. The amount involved in the alleged fraud is about N1,237,245,000 and US$80,000.

Prominent victims of the alleged scheme include Mr Godwin Anono, Chairman of Standard Shareholders Association of Nigeria and Mr Arnold Ekpe, former Managing Director of Ecobank Transnational Incorporated (ETI). It appears that the plaintiff in this case was also caught up in the fraud.

The judgement will have a major effect on the operations of the NSE going forward.

More power to retail investors

The ruling could handover unexpected power to retail and institutional investors who are looking for more disclosure from the Nigerian Stock Exchange.

The Nigerian Stock Exchange currently makes information such as press releases, company results, investor presentations, stock prices and valuations, publicly free on its websites. However, critical information is offered at a cost often too steep for retail investors, but within the reach of stockbrokers and research organisations. With this judgement, proprietary data could become free if investors force the hand of the Exchange via the FOI.

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The judgement could lead to lower revenue for the Exchange. Data from the NSE 2017 annual report shows that the Exchange made N251 million from market data. Institutional investors, in particular, tend to subscribe for the data.

In addition, the Exchange may have to cough out more money to answer investors’ inquiries. Analysts, who spoke to Nairametrics, also fear that civil society activists could use the ruling as an opportunity to beam the searchlight on public office holders or conduct witch hunts. Investigations relating to previous corruption cases in the country have revealed that some elected officials have shareholdings in listed companies, with some acquired while in office.

Sources in the Exchange reveal that they intend to appeal the judgment, fearing that this could also lead to abuse from malicious investors. According to a source, the information required by the Plaintiff has already been sent by the Exchange.


Will demutualization happen faster?

Cases like this may make the Nigerian Stock Exchange (NSE) hasten a planned demutualization. The bill for the demutualization is currently awaiting the assent of the President.

Demutualizing a company would make it a private firm, which is not subject to the Freedom of Information (FOI) Act.

Demutualization is the process by which an exchange is converted from a company owned by members or brokers to one in which members of the public can buy shares.

What will the NSE do next?

The NSE, in response to a mail by Nairametrics, stated it had complied with the judgement, without prejudice to its right to appeal and on the 8th of June, delivered copies of the inspection report to the Plaintiffs (the parties that took the NSE to court) through their counsel.  The Exchange is currently studying the judgement with a view to appealing.

The Exchange wishes to make it clear that it disagrees with the decision of the court that it is bound by the provisions of the Freedom of Information Act and is presently “considering legal advice with a view to possibly filing an appeal against the judgment of the Federal High Court.”

The Nigerian Stock Exchange (then known as the Lagos Stock Exchange) was founded on the 15th of September, 1960. Trading, however, commenced on the 5th of June, 1961. The Exchange was renamed the Nigerian Stock Exchange in December 1977.


Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training.He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE).He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy.You can contact him via [email protected]

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Why SEC should support democratization of sale of foreign securities

In the spirit of progressive engagement and dialogue, many voices now suggest that the SEC take a fresh look at its latest position.



The directive of the Nigerian Securities and Exchange Commission (SEC), issued 8th of April 2021, has been met with consternation and a straightforward (but hopefully simplistic) interpretation that; “the government is out to stifle innovators, again.”

These perspectives aren’t unfounded, as innovators of all shades have taken a heavy beating lately due to a number of direct government policies or interpretations of these policies – irrespective of how well-intentioned these policies may be. On the contrary, micro-investment platforms deserve a fair shot within Nigeria’s capital market.

This is especially true considering that the recent regulatory fervour coincides with a period where the innovation ecosystem is recording new milestones and gaining traction, solving problems for users in all walks of life, democratizing wealth creation, and creating high-value jobs, all of which Nigeria desperately needs.

READ: Crypto market surges above $2 trillion, as Bitcoin stages a huge comeback above $60,500

In the last six months alone, Nigerian startups have gained the confidence of some of the best investors locally and globally, leading to never-before-seen innovations, acquisitions, and investments into the economy. This promotes interest in the Nigerian innovation ecosystem from foreign market actors and increases its relevance as a high-value job creator. Some now wonder if our regulators want more or less of this positive momentum.

This latest notice from the SEC warned Capital Market Operators (CMOs) to desist from selling securities not quoted or registered, as only registered securities in Nigeria can be issued, sold, or offered for sale. Ostensibly, the directive requires CMOs registered with the SEC to offer only securities listed on any exchange in Nigeria to the public.

READ: XRP posts a big bang, as legal tussle with SEC lingers

The challenge here is that High Net worth Nigerians (HNIs) have always had access to foreign securities offered or acquired through registered CMOs for the apparent benefit of the upside available in markets such as the United States. This should be democratized to allow Nigerians with smaller incomes to have access to valuable global stocks within fair rules, and this is what the likes of Trove, Chaka, Bamboo, and Risevest have done. In fact, this democratization should be applauded as one of the outputs of a thriving innovation ecosystem that provides practical
palliatives for the stifling inflation and erosion of value we have all experienced as Nigerians.

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After all, what is suitable for Dangote should also be good for Musa, who earns NGN50,000.00, and thanks to any of the apps mentioned above, can today invest in shares of Dangote sugar while also adding a quarter of a Google stock to his portfolio every month. This “magic” of innovation is a poverty alleviator that should be encouraged and nurtured while ensuring that the public is protected from any harmful financial practices.

READ: Flour Mills shares surge by 6.9%, lifting the miller’s capitalization by N8.2 billion

It is important to acknowledge at this point that the SEC has been a positively progressive regulator, generally engaging its public fairly. The issuance of the guidelines for crowdfunding and accommodation of FinTechs within the capital market was encompassing and engaged stakeholders of all hues. This should be commended. The SEC’s position classifying crypto as an asset class is also fair, refreshing, and proactive. We need more of this and not less.

At a time when we are exploring how the Nigerian capital markets can become a viable option for listing tech startups, this latest body language of the SEC, and the Nigerian government as a whole can be further misinterpreted.

In the spirit of progressive engagement and dialogue, many voices now suggest that the SEC take a fresh look at its latest position, as these innovations are widespread, publicly accepted, and valuable. Furthermore, these innovations support some of the registered and regulated CMOs by offering white-label solutions that are accelerating the ability of these legacy CMOs to better serve their HNI customer base, with local and foreign securities. The emergence of these innovative micro-investing platforms has triggered investments into local Nigerian securities in multiple folds. The volumes these innovative platforms channel into Nigerian stocks are arguably the most significant development in Nigeria’s capital market in a decade.

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By virtue of the existence of these innovators, their combined strength has introduced over 150,000 new market participants who are primarily millennials: a majority of whom purchased their first set of stocks through these platforms. Before now, they had no active interaction with the capital market. These new entrants are now trading in excess of NGN10,000,000,000 (Ten Billion Naira) monthly through these apps. Note that a good chunk of the highlighted trade volume is routed through local CMOs to purchase Nigerian securities on the Nigerian Stock Exchange(NSE). Long term, these innovations would also serve as a channel to offer Nigerian guarantees to a global audience which would be a massive positive for the economy.

The quest for diversification of portfolios to include foreign securities can only be good overall. It underscores the global trend in cross-border trade in securities as disintermediated by technology and the need to enhance portfolios’ value globally.

Rather than curbing the practice of offering Nigerian and international stocks in a basket, this micro-investing trend should be allowed to flourish within reasonable regulatory frameworks. These platforms make investments attractive, easier, and affordable. Micro investing will curb the menace of pyramid and Ponzi schemes while introducing a new generation into Nigeria’s securities market in parallel with their appetite for global securities. Regardless of what we decide, the world has gotten smaller, and information that enables people to easily seek the best economic outcomes is readily available. While other nations gain from micro-investing, shouldn’t our people do too?

The ultimate beneficiary of increased wealth for Nigerians is the Nigerian economy. Rather than shutting Nigerians off from the rest of the world, we should be accelerating global access for our millions of people; hence this is the time for dialogue, not shutdowns.


Kola Aina is the Founding Partner at Ventures Platform and writes from Lagos, Nigeria.

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Buy what? Dangote vs BUA Cement

Dangote Cement has a market capitalization of N3.65 trillion, while BUA posts a N2.49 trillion capitalization, but does size win?



I want to review the performance of the largest quoted companies in Nigeria.

On the Nigerian Stock Exchange, they don’t come any bigger than Dangote Cement (Dangote) and BUA Cement (BUA). Only MTNN stands with both cement companies in terms of market capitalization. Dangote and BUA are both blue-chip companies, in the same sector and both enjoy federal import protection, they also both serve a local market with huge demand for cement.

Which is a better investment? Let us assume I have N100,000.00 (One Hundred Thousand Naira,) which should I buy? Let us review both stocks with FY 2020 results they posted. For consistency, I am going to use my trading view terminal numbers.

READ: Dangote Cement joins MTN in the trillion-naira club, as 2020 revenue surpassed N1 trillion

Market Capitalization

First, we talk about capitalization, (Market cap is the number of shares issued x market value of shares ). Dangote Cement has a market capitalization of N3.65 trillion, while BUA posts a N2.49 trillion capitalization. Does size win? Dangote is bigger? Not yet!

Market Price

With N100,000 I can buy about 465 shares of Dangote at N215 a share and 1,360 shares of BUA at N73.50 per share. Is BUA cheaper? do we have a winner? Not quite. Let us dig deeper.

Dangote Cement posted a Net Income figure of N276 billion, if we divide this earning by the number of issued shares which is 17 billion, we get an Earnings Per Share (EPS) of N16.14, so every share of Dangote Cement earns (not pays) the investors N16. Similarly, the Earning Per Share of BUA is N2.0

READ: BUA Cement loses N162 billion in market value in a week

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Thus when I buy Dangote Cement N215 per share, I am buying 16 times the earnings of Dangote. We can simplify this by simply comparing the price I pay per share of Dangote to the EPS of Dangote (Price to Earnings Ratio), thus I invest my cash of N215 to buy 16 times the earnings of Dangote, thus the Price to Earnings Ratio of Dangote is 13.31 (P/E). Using the same calculation, the price for each earnings of BUA (the P.E.) is 35.38. This means even though I am paying more cash for each share of Dangote, I am paying less to buy the earnings of Dangote, thus Dangote is cheaper than BUA.

So our first milestone is reached, we have used the Net Income, Market Price, and Number of Issued shared to get the Earnings Per Share, we have then determined what amount of earnings we are buying to determine which stock is at a bargain.

READ: Oba Otudeko’s stakes in Firstbank and Honeywell are worth over N10 billion

What else?

Let us look at the earnings that will be paid in cash. Remember, Earnings, is just the Net Income of Dangote, we as equity holders have the opportunity to share in any portion of the Net Income.

Dangote in 2020 paid out from earnings N272.69 billion as dividends, this translates to about N16 per share or in terms of returns 7.44%. We get this Dividend Yield return by comparing the dividend paid to the market price per share (D/P). BUA also in 2020 paid out N59.26 billion as dividends from earnings, this translates to a dividend yield of 2.81%.

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So, if I invested N100,000 in shares of Dangote Cement, I would earn a cash return of 7.44%, if I did the same with BUA I would earn a cash return of 2.81%.

READ: Jumia: In search of the elusive break-even sales

Let us go a bit deeper…

When you buy a stock, you are buying into the earnings and cash flow. Dangote Cement in 2020 earned N276 billion and paid N272 billion as dividends meaning they retained about N3 billion for that FY while generating over N248b in Free Cash Flow. Similarly, BUA earned a net N71.52 billion, paid out N59 billion in dividends, retained N19 billion but posted a negative Free Cash Flow of (N95.49 billion). Should BUA cement have simply used that cash to finance working capital rather than paying it as dividends? Perhaps. Let us speak more of Cash flow.

Cash retained is cash not paid to you the investor. You have to ask how well your company is utilizing that cash retained. Should it all be paid out as dividends? Or retained in the company to fund expansion and growth?

READ: Three things Nigerians can learn from Warren Buffet’s latest letter

Look at it this way, if Federal Government Bonds were offering a Yield of 15% and we see that Dangote is offering a yield of 7.44%, then as shareholders you should demand that Dangote pays more cash to you to allow you to invest in FGN bonds because you get a higher return (at lower risk). The point is any company retaining cash or paying cash at a lower yield than the market is hurting the investors, who are missing the opportunity of investing higher elsewhere.

Let us score both company managers by how well they have managed the revenues and capital of the companies


 Return on Assets %Return on Equity %Return on Invested Capital %EBITA Margin %Net Margin %Debt to AssetsLong Term Debt to Assets
Dangote Cement14.6231.2126.9244.0424.310.240.08
BUA Cement11.1519.1215.3541.8732.030.360.23
FY 2020

Across the board, the management of Dangote Cement has done a better job when compared to BUA Cement in managing the assets of the company. Dangote Return on invested capital is higher with a much lower recourse to debt and of course a higher FCF number.

Overall, on Earning, Returns and Efficiency, it appears Dangote Cement posts better fundamentals…



There is a wealth of information that should help decide whether you should buy a stock or not and how long you can hold on to it. Our recommendation is based on the information we currently have and is wholly the opinion of the writer

This article is an investment guide and as such you should conduct extra analysis before deciding whether to buy, sell or hold a stock. The decision to buy, sell or hold a stock is solely yours.

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