CAPITAL MARKET REFORMS INSIGNIFICANT UNLESS

Much taunted reform of Nigeria's capital market structure and processes may not produce any significant impact after all unless it is complemented by larger macroeconomic policies and programmes that consciously make room for entrepreneurial prosperity.

This is the view of financial market experts who spoke to Daily Sun on how best the reform plans could be executed to lift the market and the economy generally.

According to Dr. Martin Oluba, capital market reform without government liberalization of the areas involving heavy industrial engineering infrastructure to provide needed support for real sector and overall economic growth and development the long-run prospects of the reform will remain doubtful.

Part of capital market reform initiative which the Securities and Exchange Commission (SEC) seeks to implement is to redirect capital formation in the market away from service delivery sector to the productive sector so that financial intermediation for long term capital will favour the productive sector. Over the years, capital formation through the Nigerian capital market had largely favoured the services sector of the economy to the detriment of the real productive sector which is why analysts believe that the market is yet to link its role to the larger economy.

According to the managing director and chief executive officer, Lambeth Trust & Investment Company Limited, Mr. Davi Adonri new leadership of SEC has started on good note by planning to link the role of the market to the larger economy, a shift of emphasis that is capable of transforming the economy into a heavy industrial base.

He is of the view that if Nigeria is going to move forward in line with the paradigm shift of linking market relevance to the larger economy, then market regulators must now strategically redirect capital formation to the strategic area of heavy industrial development. But Oluba, a professor of economics, insists that the most salutary effects of SEC reform-implementation will manifest when it is complimented by larger macroeconomic policies and programmes that consciously make room for entrepreneurial prosperity.

He said: “Liberalization holds the key because it enhances competition and inevitable efficiency in resource allocation and output to the concerned sectors. But that means that the institutional structures and other processes that should enable it to produce the best results are in place”.

He warned that continued failure to resolve political and constitutional issues bugging down the economy and initiate a concerted attack on corruption, no significant result will be achieved in the reforms.

He added: “SEC's role in the capital market should be much more proactive and more collaborative. Of course these hinge on the supposition that the functionaries within SEC substantially appreciate the stakeholder expectations from them. “Ideally, the Commission should have a robust early warning model upon which it can proactively detect imminent disruptions in the normal and expected path of the capital market and work hard to eliminate or minimize its incidence.

“Much of this it can do by being more collaborative with other regulators such as the CBN and critical ministries such as the Ministry of Finance that can enhance the overall quality of its final policy and programme output. Its relationship with the NSE should also be consistent with expected reporting line structure and not the other way round as practice showed in recent times”, Oluba stated.