The Capital Market And The Challenges Of Real Sector Financing In Nigeria.
[A STUDY OF THE PERIOD 2000-2009]

CHAPTER FIVE

5.0 SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

5.1 SUMMARY OF FINDINGS

The Nigerian Capital Market, most specifically the Nigerian Stock Exchange (NSE) since its establishment in 1960 has existed to provide long term capital to corporate bodies and government for the purpose of Industrial, Socio-Economic and Infrastructural growth and development. The NSE has become an important market in emerging economies such as Nigeria.

A review of market indicators such as:

- Market Capitalization

- The NSE All-Share Index

- Total Turnover Volume

- Total Turnover Value

- Number of Listed Companies

- Number of Listed Securities

- Number of Stock Broking Firms etc. Shows that the market has achieved an over-whelming growth, most especially within the period under study.

Also, a review of the selected quoted stocks in the real sector such as:

- Building Material Sector Ashaka Cement Plc

- Food/Beverages and Tobacco Sector 7Up Bottling Company Plc

- Petroleum (Marketing) African Petroleum Plc Shows a steady growth in share capital as a result of access to capital market, this has therefore enhanced their activities as well as profitability.

5.2 GROWTH OF THE NIGERIAN CAPITAL MARKET

The Nigerian Capital Market shows commendable growth trend. For instance, the study shows that market capitalization was N478.6 Billion in year 2000 and by 2009 has increased to N7.03 Trillion. It must also be highlighted that exceptional growth figures of N13.295 Trillion and N9.56 Trillion were 99 achieved in years 2007 and 2008. (Source: NSE Fact Book 2000; 2007 and 2008).

This growth records, therefore, establishes the fact that the market has been effective in capital mobilization and allocation to the sectors with the productive sector ranking amongst the major beneficiaries.

5.2.1 GROWTH IN VALUE OF SHARES TRADED

The growth in the value of shares traded on the Nigerian Stock Exchange has been on an upward trend. From the Value of Shares traded figure of N28.2 Billion in 2000, the Stock Exchange sustained a consistent traded value increase of N28.6 Billion in 2001, N60.3 Billion in 2002, N20.70 Billion in 2003, N225.82 Billion in 2004, N262.94 Billion in 2006, N2.1 Trillion in 2007, N2.4 Trillion in 2008 and N685.72 Billion in 2009. The drop in 2009 traded value is as a result of fall in share prices as a result of stock market instability and loss of confidence by investors on investments in stock. In all, relative to the value in 2000, there has been a geometric growth in value of traded stocks on the floor of the Nigerian Stock Exchange. 

5.2.2 ALL-SHARE INDEX

The All-share Index applying values as at year end was 811.01 as at year 2000. For the periods 2001 to 2009, the values were as follows; 10,963.11; 12,137.72; 20,128.94; 23,844.45; 24,085.76; 33,189.30; 57,990.22; 31,450.78; and 20,827.17. (Source: NSE The Stock Market Review for the various years).

The value of the index shows that the capital market has been on steady rise in terms of fund mobilization and allocation to the sectors. It is worthy to note that the Second-Tier Securities Market (SSM) established to help small and medium scale indigenous enterprises raise additional capital has not done too well. This can be attributed to the SMEs inability to meet the listing requirement of the Nigerian Stock Exchange coupled with harsh operating environment (that is, rising unemployment, weak purchasing power, battered investors confidence, etc. It has contributed only 1.4% and 0.252% of volume and value of transactions in the past years. While, It only accounts for 0.32% and 0.5% at present. (NSE Fact Book (2000).

From the findings above, one can infer that the Nigerian Stock Exchange (NSE) has been effective in the mobilization of funds to the productive sector of the economy. This is so because the activities and market indicators of the capital market have grown in leaps and bounds within the period under study.

It was also observed that the market operates with some inhibiting factors which can be classified as follows:

- Inadequate Savings for Investment

- Weakened Purchasing Power

- Battered Investors Confidence

- The Impact of Global Economic Meltdown that has resulted to foreign investors shunning assets considered risky while local investors favour investment in short-term securities.

- Inadequate tradeable market instruments. The major instruments traded at the floor of NSE are government stocks, industrial stocks, as well as equities. For the Stock Exchange to be more effective in its mobilization and allocation function to the productive sector, more tradable  instruments must be introduced to create wider choice of investment instrument for investors.

- Lack of market transparency required to drive a standard stock market. This is evidenced in the recent crisis as witnessed by equity investors especially investment in Banking Sector Shares. - Political and Economic Instability. Our socio-economic system is currently very unstable and hence it impacts on the capital market.