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

5.3 CONCLUSION

From the research outcomes on this study, one can conclude that the capital market has contributed effectively in the mobilization and allocation of funds to the productive sector of the Nigerian economy. It thus has played a vital role in the economic development of our country Nigeria. Given the level of growth of activities as detailed in the data above on capital market indicators for the periods under study, it can be concluded that government policy on privatization, bank recapitalization as well as the relaxed inflow of foreign investment funds had an effective growth impact on the market.

CAPITAL MARKET INDICATORS 2000 – 2009 (See Appendix iii)

It is worthy, therefore, to say that the NSE will play a vital role in the future economic prosperity of the productive sector in Nigeria. This it can do effectively if the environment is made favourable via the provision of necessary infrastructural facilities, political and economic stability, purchasing power increases, security and safety of life and property, renewed investors’ confidence. On the part of the market, there is need for transparency, adherence to ethics and standards as well as creation of more awareness both for the investing public and firms needing listing on the exchange. Also, the exchange should be able to assure investors that the market has become stable. This is necessary given the level of loss of confidence as a result of recent market instability.

Finally, this research work has confirmed that the capital market has been effective in the mobilization and allocation of funds to the productive sector of the Nigerian economy.

5.4 RECOMMENDATION Inspite of the observed short coming of the capital market (that is, The Nigerian Stock Exchange), it has contributed immensely to the mobilization and allocation of funds from the surplus units to the deficit units of the economy especially the productive sector. Given the potentials of the Nigerian Stock Exchange, there exist the chances of it attracting a large number of new firms for listing on the Exchange in the near future. When this is achieved, the liquidity and capitalization level of the market will be further enhanced. Measures that can be adopted to bring about such changes include:

- Promoting the use of corporate bond by productive sector firms

- Effective underwriting system for new issues given the fact that margin loan by banks no longer exist.

- The introduction of more financial instruments such as mortgage backed securities, debentures, preference shares as well as global depository certificates that can assist firms raise foreign exchange denominated capital.

- Increasing the effectiveness of infrastructural based financing, will help provide infrastructure for use by the productive sector and thus create a stable environment for production as well as reduced cost of production.

- Increasing the level of awareness about the Stock Market as a source of long term financing for the productive sector, services sector, government, etc.

- There is need for a reduction in quotation requirement, charges as well as taxes on transaction. The managers of the Exchange should influence the authorities to introduce tax incentives for companies who source their financing through the capital market.

- The Nigerian, indigenous investor should be kept abreast with the requirement of trading their shares instead of the culture of buying and holding shares as a measure of wealth.

- The need for a diversified economy, requires that activities in the capital market should be dominated by the productive sector (that is, at least 60%).