The NGX has always been an institution very close to my heart. I remember jumping on bikes and rushing towards the Stock Exchange building in my blue overalls to go and watch trading. Then I qualified as a stockbroker and dealt on the Exchange becoming part of that engine of economic growth.
The Exchange has gone through a lot of transformations and even in those heydays the demutualization of the bourse had always been an agenda that all stakeholders eagerly awaited.
The reason for this optimism was not far-fetched. Opening its ownership structure to equity holding would free it of the red tape of regulatory ownership, it would increase Corporate Governance and transparency in its dealings, it would make it more nimble and better responsive to the dictates of a fast-moving and dynamic operating space and finally in my estimation better position it to play a much more influential role in international markets and trades.
Thankfully, this vision has come to fruition in our lifetime. The demutualization of the bourse has come complete with a change of name and rebranding. It is now known as the NGX and has attracted very credible and strong hands to lead its push towards the actualization of its goals and vision.
But as we clap, we begin to see some ominous signs that all may not be well with this new structure.
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The leprous hands of the usual ‘Nigerian Style’ have crept in and this is making some independent observers like myself begin to quiver just a little bit.
The NGX is planning to issue a 10% stake to its workers just like that. Sadly this would also be backdated to January 1, 2021.
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This decision has been taken by fiat without recourse to existing shareholders and is expected to be ratified in the AGM that has been called.
Now, this could have been taken in the general interest of staff in a bid to maybe ramp up human Capital Cohesion or even retain some of the superstars that have been attracted to the place.
But this in my mind eyes throws up some bumps on the road works.
Firstly, the nature that this decision was taken shows an arbitrariness that should not even be in the equation considering the pedigree of the Exchange. The Exchange is coming from where it had been ran by very strong men especially WOMAN. Where decisions were taken on a whim and where dissent was really frowned at and in some cases punished ensuring that everybody stayed in line.
This contributed immensely to the stunted growth of the Exchange. The premier exchange where until very recently the very biggest players on the market were not listed and a vast number of the growing SME players including the very many fintech startups are not even looking their way.
So just waking up on the eve of a highly applauded exercise to free up the bourse to just allot a 10% stake to its workers is, to say the least, ‘one kind’. Why 10% why not 50% since it can just happen on a whim.
The rationale as to how they reached the number of shares to be allotted and the percentage reached is not indicated anywhere nor the basis of the creation or establishment or a staff share scheme given. These are not very good signs.
My real fear is that if this is allowed to hold without proper dimensioning, it could dilute the shareholding of those who actually paid for their own shares, leading to tensions in the new structure or actual sale out by those who would have really played very key roles in the system.
I hear that since the demutualization was completed, a proper Board has not been constituted to reflect the interest of the new shareholders. Now, this is a major source of concern meaning that the Bourse is still in the hands of interests that are not necessarily representative of the new ownership structure.
It’s too early to start to issue shares to this magnitude when associated value has not been created just yet and with no consultations with critical stakeholder groupings like earlier mentioned.
My thinking is that such significant issuance of shares should not be considered in isolation of the contract that will guide the scheme and allotment of the said shares.
Preliminary consultations with some stockbrokers who are shareholders in the company show that this is an extremely unpopular program which begs the point of the current Board that it is acting in the interest of the stakeholders.
As alluded to earlier, the equity stake of the current Board is not significant and its composition is in no way reflective of this new reality hence the headwinds this particular decision is facing.
Finally, the NGX or in whatever branding it wants to access the new markets with is really not engaging properly. In my estimation, it is not firing on all throttles as can be seen with its position being threatened by other players and the PE space where the new players of the Nigerian economy especially in the tech space and the rest prefer to go play rather than access a bourse with very stuffy listing requirements without the necessary human capital complement to ensure efficient partnerships.
This demutualization was expected to sort all that out but with this position, it is taking we may be having just the beautiful logo and branding as the new thing in our hands and nothing more.
I really do hope this would not be another sad love song.
Joseph Edgar is a qualified Stockbroker licensed to deal on the NSE