The stockbroking industry has called for an overhaul of the financial market system to attract long-term capital and build a virile domestic capital base.
Stockbrokers under the aegis of the Chartered Institute of Stockbrokers (CIS), in their economic outlook, urged the Federal Government to set up a council, comprising various professional bodies to drive savings as a strategy to encourage investors towards medium and long-term investment in Nigeria.
In a statement entitled: “The Nigeria Economic Review: Outlook and Recommendations for 2020”, the CIS urged the Federal Government to review entire financial system for enhanced growth and development.
According to the institute, the Federal Government should review the structure of the entire financial system significantly to raise the utilisation and development of the capital market, especially, fixed income and equity segments to create a balanced and faster growth inclined system.
The report noted that there was a need to set up an independent council comprising banks, stockbrokers, mortgage institutions, insurance companies, and pension fund administrators and others to effectively coordinate the mobilisation of savings.
Stockbrokers called on the government to institutionalise the funding framework for capital market literacy in Nigeria by financially empowering organisations engaging in financial literacy.
The Institute noted that in Nigeria, economic policy was largely discharged by way of continual interventions by the CBN while the Federal Government’s decision to close the country’s land borders also had significant impact on performance indicators.
In the review, the Institute noted that the money market continued to dominate the Nigerian financial market space with the Central Bank of Nigeria (CBN)’s interventions in various sectors of the economy.
“As banks control almost the entire liquidity in the Nigerian financial system, they should support capital market investments, including re-introduction of margin lending with improved regulations.CBN, being the dominant institution that currently provides liquidity support for critical economic sectors, should extend its liquidity support to the capital market, including the equity segment,” CIS stated.
The institute urged the Federal Government to direct pension funds in Nigeria to look beyond fixed income investments and also invest substantially in the equities market for liquidity and stability purposes.
According to the report, greater tax incentives should be granted to companies and individuals in accordance with their levels of savings and investments in formal and recognized outlets such as stock markets.
The report pointed out that current low share prices at the Nigerian stock market provides investors with significant opportunities for capital gain.
CIS added that demutualisation and insurance sector recapitalisation will provide additional boosts for market recovery.
