Real problem of stock market is “leadership meltdown”

Real problem of stock market is “leadership meltdown” - NCM reportBy KELECHI MGBOJIMonday, May 18, 2009
Capital market analysts have blamed “Leadership meltdown” as the real problem with the Nigerian capital market and the economy as a whole insisting that unless this aspect of the nation’s economic crisis was addressed, the entire economic system would remain in the woods. At recent presentation of the Nigerian Capital Market Report (NCM) 2009 titled “Making Money in the Nigerian Capital Market” the experts unanimously agreed that the real challenge facing the stock market and the entire economy was that of leadership and not the meltdown urging all stakeholders to embark on inevitable paradigm shift that would offer a fresh sense of direction.The report unveiled at the corporate head office of Proshare Nigeria Limited in Lagos took a critical look at the leadership in the nation’s capital market and concluded that “the challenge however goes beyond the simple focus on the market meltdown to the unaddressed leadership meltdown in the management of the economy and markets that we should be focusing on”.A release signed by Mr. Olufemi Awoyemi, Managing Director/Chief Executive Officer of Proshare stated that Nigerian capital market, once thought to be immune from global developments, has experienced a paradigm shift that threatens the very way business is thought of, conducted and regulated.“The Nigerian business environment cannot afford to ignore the impact of global developments on its economic and financial decision-making” Awoyemi said.He further said that all stakeholders including investors, analysts, fund managers, regulators and quoted companies must now learn a new way to engage the Market.His words: “This process will prove the most unsettling and may determine how well Nigeria as a nation and an investment destination positions itself. The country, at least, has left the self-denial stage and embraced the need to employ rigor in addressing the ‘simplistic and routine’ unaccountability in policy making”.Awoyemi said the analysis of the NCM for year 2008 provides a useful review as to the developments and reactions of the leadership adding that it also offers a review of the implications of the dwindling oil prices on the economy, the management of the money market and foreign exchange regime.In his submission, “The opportunities (are here) for the country to re-appraise its financial structure and market place both at the federal and state government levels; as well as the impact of a potential lending slow-down on the real sector”.In the same vein, Dr. Martin Oluba, President and CEO of Valuefronteira Limited an economic strategy firm urged all stakeholders to put pressure on the market regulators for a more efficient structure.The professor of economics noted that the responsibility of putting pressure on our capital market regulators is upon all stakeholders to ensure that information to determine fundamentals of and the operations of quoted companies is readily available.“If we rely on fundamentals that are largely our balance sheet, profit and loss accounts, we are dealing essentially with history. For instance if I want to know the performance of the banking sector in the capital market, I need a lot of information from the Central Bank of Nigeria (CBN); which is not there” Oluba pointed out.He argued that fundamentals here would mean that the agencies of government that have the responsibility to provide information as and when due should do so warning that if people rely on accounts that were made available by quoted companies, a lot of things would go wrong. “The people preparing the accounts have every incentive not to give you what they want to give to you, they are businessmen and know they are being valued based on the numbers they put in an account” Oluba stated.“Once they can jump the hurdles of regulators, whatever they put is fine and good for them. When we say fundamentals, we should be looking at the wider environment and the people who have this information that would enable us evaluate the events that occur at that environment” he said.Oluba urged regulatory bodies like the CBN, Securities and Exchange Commission (SEC), and Nigerian Insurance Deposits Commission (NDIC), Federal Inland Revenue Service (FIRS) to provide adequate information, adding that they have to revert to the environment and that if the environment is growing, that the capital market would also grow.