THE ROLE OF NIGERIAN STOCK EXCHANGE IN THE DEVELOPMENT OF THE NIGERIAN ECONOMY
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The Nigerian stock exchange which started as the Lagos stock exchange Act of 1961, following the report of the Bare back committee, set up May 1958, by the Federal Government, to advice on ways and means of fastening a share market in Nigeria.
The Lagos stock exchange was sequentially incorporated on the 15thSeptember, 1960. But began operations on the 2nd December, 1977 transformed into the Nigerian stock exchange with branches now in Kaduna, Port-Harcourt, Ibadan and Onitsha.
Presently, there are six branches of Nigeria stock exchange with each branch having a trading floor. The branch in Lagos was opened in 1961, Kaduna 1978, Kano 1989, Onitsha 1990, Ibadan August 1990 and Port-Harcourt 1980. Lagos is the head office of the exchange. Besides Abuja is now included 2001. on the other hand, the Nigerian stock exchange started only with 19 (nineteen) securities and traded on it’s floors in 1961, now has 257 securities made up of 36 Federal government stock, 62 cooperatives or industrial loans and debentures) preference stocks and 159 equity/ stock of companies, all was a total market capitalization of approximately N3 half billion.
During the early years, trading was however, low due to the slow ratio of capital formation, lack of awareness of mechanics of stock exchange transaction and poor communication facilities.
However, with the implementation of the Nigeria enterprises promotion Decree, listing was booted and by 1980, the exchange registered a total of 91 firms. The market capital of equities only has grown to over N59, 924 billion. There are 48 listed firms whose stock are traced on the floor of the exchange, all grouped by sub-sectors.
The idea of a stock exchange for Nigeria came into being from the report of Professor R.H. Darback committee published in 1950 which recommended as follows.
1. The creation of facilities for dealing in shares.
2. The establishment of rules regulating transfers.
3. Measures to encourage savings and issues of securities of government and other organization.
This report was accepted by the federal government and in September 1960, the Lagos stock exchange was incorporated as a non-profit making organization through the combination of effort from the following.
1. Central bank of Nigeria
2. Nigerian Industrial Development
3. The Federal Government
4. Nigeria business community.
The subscribers to the memorandum and Article of association of the Lagos stock exchange at the time of incorporation include:
1. Alhaji Shehu Bakar
2. Chief Theophilus Adebayo Doherty
3. Sir Odumegun Ogukwu
4. Mr Akintola Williams
5. C.Y. Boneings and Co. Nigeria Limited
6. John Holt Nigeria Limited
7. The Investment Company of Nigeria Limited.
1.2 STATEMENT OF PROBLEM
The Nigerian exchange market was supposed to have contributed greatly to the development of Nigerian economy in many arrears. But the unawareness of the public on the instrument that the traded by the stock exchange posses a huge problem to the Nigerian economy. The number of people that make use of the service of the stock exchange market in Nigerian is too slow.
Additionally, most people are not abreast of the duties and responsibilities of the stockers and brokers. These two bodies play a role in the transaction of the stock exchange market in Nigeria. Since their duties and responsibilities are not properly known, these tend to present problem to the exchange.
Lastly, the Nigerian stock exchange is not fully financed by the Federal government and as a result, the exchange does not have adequate capital or fund to meet its – obligations. The encouragement and incentives which they received from the Federal government is nothing to write home about.
Therefore, this study will analyze in details the contribution of the Nigerian stock exchange to the Nigerian economy.
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