By NBF News

Over the last few months, the vibrancy witnessed in the market has given way to declining investors' confidence, declining share value, rising malpractices and crisis-ridden market among others.

The NSE, which was at one time, regarded as one of the most profitable stock exchanges in the world among other commendations, is today regarded as among the worst in the world, especially with the recent activities in the financial sector which has led to the wiping out of over N30 billion of investors' funds in some companies and the recent increase in voluntary delisting by companies.

The indices used for measuring the performance of the secondary segment of the Nigerian capital market, the Nigerian Stock Exchange's, NSE, All-share index and market capitalisation have both recorded significant decline in the last three years.

According to an evaluation report, the All-Share Index rose from 100 units in 1984, the base year to 1,107.60 in 1992 and to the 10,000 mark in 2001, before rising to 20,128.94 in 2003, 23,844.45 points in 2004 and by December 31, 2007, jumped to 57,990.22.

Also the Market capitalisation closed at N13.29 trillion in 2007. By the end of 2005, the number of listed securities stood at 288. Today, there are over 300 listed securities on the stock exchange.

A closer look at the market today show that whatever gains the NSE recorded up till then have been wiped out within two years of the global financial meltdown. By 2009, it had witnessed a 34 per cent decline, making it the world's worst performing equity index. In the first three weeks of 2009 alone, the NSE recorded 14 per cent fall in capitalisation, the world's second largest in share price depreciation after the Qatar Stock Exchange, which lost 18 per cent within the same period.

The  crises engendered by the global financial meltdown in the Nigerian capital market were exacerbated by a regime of regulation which has ossified into resistance to the multifaceted stimulus measures which the capital market authorities has injected into it.

Nigerians of all shades and substances have been badly bruised by the burst of the bubble in the capital market.

Capital market analysts in a recent report titled, 'Positioning the capital market,' said, 'To give dimension and scope to the degree of injury visited on the Nigerian capital market in the past, which damage has proven resistant to therapeutic remedy, let us consider the salient attributes of a functional market and evaluate the performance of the immediate past regulatory regime in upholding any and each of these attributes. Of importance is that each attribute confers fairness, equity and stability on the market and thus engenders robust investors' confidence.

The report said, rather than strengthen the NSE platform; its past leadership rendered it hollow, driving it almost to the point of insolvency and adverse financial health.

Today if you ask the average Nigerian to offer an impression of the NSE  he will simply tell you that the NSE presided over a capital market in which people's dreams die and their fortunes ruined. Such is the unremitting ill-will bequeathed to the NSE by its past leadership. The dispensation from findings also lost sight of the centrality of capacity building to sustaining a fair and efficient market. The Nigerian Capital Markets Institute, NCMI suffered untold neglect rather than attract the attention and resource input that should transform it into a vital resource centre for manpower training and development.

Capital market studies have shown that Corporate failure and morbidity is typically the consequence of poor corporate governance which simply refers to the degree of symmetry between the interests of various stakeholders which constitute an organisation and the equitable distribution of corporate energy and attention to custody and promotion of every interest.

In relation to the NSE, such stakeholders include, in no specific order of significance, investors, staff, management and Council of the Exchange, listed companies, capital market operators, governments, the overall economy and society.

Developments in the market  have shown clearly how all these equally legitimate interests for whose protection and promotion the various governance rules of the capital market were formulated, were routinely undermined to promote the selfish interest of a few in the market.  The Nigerian Stock Exchange before now became dysfunctional and was on a steady descent to anarchy with a troubling schism emerging between the Council members and the Management on the one hand, and a personality rift between the then DG and an influential member of the Council on the other.

Some of the rift even found expression in judicial brickbat which consigned corporate governance to a parlous even imperiled status.

'Despite a robust earnings profile, insolvency was setting upon the Exchange as inexplicable delays began to characterise its response to financial obligations and charges of insolvency became audible in many evaluations of its financial health.

The poor performance of the NSE on critical parameters was not helped by the indiscretion of the past leadership and haste in inducting the Nigerian capital market into political and ideological partisanship roles.

'Capital markets all over the world are delicate and brittle phenomena whose minders make strenuous effort to insulate them from the vicissitudes and volatilities of politics. Local and international publics were therefore bewildered when the past leadership of NSE enlisted companies on the Exchange into ill-advised pro-candidate Obama advocacy complete with a levy which every company was to pay to belong to the 'movement'. Even the infamous 'Obasanjo Third Term Project' was another misguided political adventure to which the past leadership invited Corporate Nigeria.

'Now is the time to break away from the past. Securities and Exchange Commission must live up to its duty of regulating the NSE. And the current NSE leadership should shun all the temptations of abdicating their primary roles to bringing politics as part or core function of running the capital market. The gradual return of investors to the market should be sustained.'