NSE Index, Capitalisation Drop By 0.32 %

By Michael Eboh

 30th APR 2007

The federal government has slashed transactions costs on bonds and equities by 40 percent in both primary and secondary markets to promote competitiveness, the Securities and Exchange Commission said yesterday. Transactions costs in Nigeria are among the highest in the world and have been a major gripe for investors. "The cost reduction is the culmination of industry-wide efforts at ensuring that the domestic capital market is made more competitive to attract both local and foreign investment into the country," the SEC said in a statement. For all new equity issues, costs were reduced to 4.32 percent from 6.92 percent, while costs for new bonds issuance was cut to 4.79 percent from 7.03 percent.

SEC said it has also reduced cost paid by buyers of equities in the secondary market to 2.36 percent from 4.07 percent previously, while those selling their stock holdings are now required to pay 2.65 percent against 4.12 percent. The regulator also instructed capital market operators to increase their capital base 13-fold before the end of the year to promote consolidation in the industry. The commission said the new capital base requirement would likely encourage small brokers and investment houses to merge or be acquired by larger ones. Under the new capital base requirements, the minimum paid-up capital for issuing houses has been increased to 2 billion naira from 150 million naira, while other categories of operator were also increased sharply. Nigeria began a wave of consolidation of its financial sector in 2004 when it jerked up the banking industry's capital base 12-fold to 25 billion naira, and followed it up with a recently concluded recapitalisation of its insurance sector. The Nigerian market has benefited from huge inflows of foreign capital for the past two years since IMF-backed reforms have gained momentum, earned the country $18 billion debt relief from the Paris Club and won a BB- credit rating from Fitch and Standard and Poors.

Source: Vanguard

Back to Top
Post Your Feedback