As of April 8, 2024, the Nigerian Stock Exchange (NGX) had a market capitalization of NGN 58.66 trillion. The banks account for more than 60% of the NGX’s market capitalization. Also, banking stocks account for approximately 80% of the shares traded on NGX almost daily. The banking sector does not just dominate the NSE, accounting for more than 90% of turnover, they are the market!
As asset managers move to banks and mainly banks, I call the NGX and Securities & Exchange Commission (SEC) to institute that no institutional fund manager should have more than 25% of its funds in a single sector (example, banking sector). If we do that, the NGX will see more companies listed in the exchange. Today, all the good money is chasing banks in NGX.
What do you think of my recommendation?
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As of April 8, 2024, the Nigerian Stock Exchange (NGX) had a market capitalization of NGN 58.66 trillion. The banks account for more than 60% of the NGX's market capitalization. Also, banking stocks account for approximately 80% of the shares traded on NGX almost daily. The… pic.twitter.com/7EiYbJ9NOt
— Ndubuisi Ekekwe (@ndekekwe) April 12, 2024
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We seem to be only concerned with buying and selling here, whether at formal, semi-formal or informal level. We simply do not care about making things. Once you see how a people allocate capital, it tells you all there’s you need to know about their economy.
We gather funds and start trading them, rather than putting them where they create things, thereby deepening capabilities and competitiveness. What is our goal exactly, to become world’s financial trading capital? We don’t even have the volume to compete, so it’s still marginal in the grand scheme of things.
How do we become a producing country without being intentional about it? When you say you care about something but still don’t fund it adequately, then you are a fraud. A country where politicians and bankers make a lot of money than others is obviously dysfunctional. Why would anyone go into manufacturing when you can make a lot more in banking and politics?
Sometimes we have to be unconventional in our dealings, Nigeria is not a country where you expect anyone to do the right things without compulsion, so it’s obvious that we will need to craft a policy for every specific economic lever or diversification we aspire to. Nothing happens here by common sense.