Nigeria’s first Professor of Capital Market Studies, Professor Uche Uwaleke, has advised the federal government to list state-owned enterprises on the Nigerian Exchange (NGX) to fund development across the nation.
He made this known on Wednesday, February 26, 2025, while delivering Nasarawa State University’s 50th Inaugural Lecture, tagged “Unlocking Wealth and Leveraging Entrepreneurial Knowledge Ecosystems: Understanding Capital-Harnessing Essentials.”
Prof. Uwaleke currently serves as the Director of the Institute of Capital Market Studies at Nasarawa State University, Keffi.
Unlocking Nigeria’s Hidden Wealth
Speaking at the event, he stated that while the Nigerian capital market has recorded remarkable improvements in the last decade, several challenges inhibit the realization of its potential.
- He explained that, at less than 15% of Nigeria’s GDP, the current size of the capital market constrains its role in national economic development.
- He also highlighted that the issuer base is not diversified, with the NGX dominated by a few companies, leaving the market vulnerable to shocks.
“Only 10 out of 151 listed companies account for over 60% of equities market capitalization,” he stated.
- According to him, as the nation continues to witness improvements in the macroeconomic environment, the need to access long-term capital to accelerate economic growth cannot be overstated.
- He proposed the adoption of the “Incentives, Privatization, Optimization” (IPO) approach to strengthen the capital market in Nigeria and harness long-term funds required to develop an entrepreneurial knowledge ecosystem and unlock wealth.
- On privatization, he stated that in emerging markets, privatization or listing of state-owned enterprises has proven to be one of the strongest levers for influencing issuer demand.
“The Federal Government (FG) is therefore advised to sell stakes in state-owned enterprises through the Exchanges to raise funds for development,” he stated.
- Citing a strategy, he said the FG can make it possible for the public to invest in the oil and gas sector through the creation of a Special Purpose Vehicle, which can be listed on the Nigerian Exchange.
Regarding incentives, he emphasized that these could take various forms and have the potential to encourage more companies to seek quotation on the Exchange.
- He called for the introduction of a tiered corporate tax system in favor of public companies listed on the Exchange, as well as tax breaks for newly quoted companies for a period of time (say, one year).
- He suggested that Nigerian universities could also tap into the capital market through the issuance of bonds on securities exchanges.
“The National Universities Commission (NUC) should rise to the occasion by regularly ranking universities in Nigeria to stimulate the interest of rating services,”he added.
He also called on the government to optimize the country’s capital market potential by encouraging investments in Real Estate Investment Trusts (REITs) to unlock capital for housing development, as well as develop a robust secondary mortgage market to improve access to affordable housing finance.
He maintained that unlocking Nigeria’s hidden wealth through the capital market is possible if stakeholders leverage the market’s potential to mobilize and allocate resources while growing the entrepreneurial knowledge ecosystem.
What You Should Know
The Nigerian Exchange is a stock exchange that allows investors to trade and list securities.
- The NGX experienced remarkable growth in 2024, as a wave of equity listings and capital-raising initiatives propelled market metrics.
- In January, total market capitalization surged by 53.37%, climbing from N40.918 trillion to N62.76 trillion, while the All-Share Index (ASI) advanced by 37.65%, closing the year at 102,926.40 basis points.
- This significant expansion was underpinned by the listing of 269.942 billion shares, valued at N5.839 trillion, across multiple sectors.
The year’s equity activities reflected a strategic mix of public offerings, rights issues, and private placements, as companies raised capital to comply with regulatory mandates, address foreign exchange challenges, and fund strategic growth initiatives.
