There is the need for government to encourage more foreign participation in the Nigerian capital market.
This was the opinion canvassed by the Chief Executive Officer, Anchoria Investment and Securities Limited, Mr. Olusola Dada, at the ninth annual PEARL Awards lecture for capital market development in Lagos on Tuesday.
In his speech titled, 'Enhanced capital market growth, recovery and stability: Path to sustainable national economic development', Dada said that there was the need by the regulatory authorities to restore investors' confidence in the market.
According to him, this can be achieved through activities that show fair and transparent transactions in the Nigerian Stock Exchange.
He also stressed that government must encourage more foreign investors to participate in the market to facilitate economic growth.
He said, "The value of transactions in the Nigerian capital market must be boosted and there should be availability of more investment instruments such as derivatives, convertibles, swaps and options in the market.
"The level of corporate governance in the stock market must be enhanced and the risk management framework strengthened."
He also expressed the need to ensure stable macro-economic environment to attract foreign multinational companies or their subsidiaries to be listed on the nation's bourse, adding that the supervision and regulatory framework in the financial system must be strengthened with focus on risk management.
Dada cited low level of monetisation of economy, high level of inflation and the level of private sector credits as factors still affecting stock market performance in Nigeria.
He lamented the high interest rate, adding that the level of private sector credits had also not sustained the new investments necessary to facilitate economic growth.
He noted that a developed capital market would enhance the efficiency of the allocation of financial resources, as well as play a major role on the capital account of the country's balance sheet.
"Experience in recent decades has been that bank-based financial systems have not always been able to adequately meet the need for capital, especially long-term capital. In this regard, capital market development increasingly has been seen as a critical factor for the long-term growth prospects in emerging markets.
"The further development of a domestic market will not only provide local investors with a variety of investment opportunities, but also give them alternative instrument that can be used to substitute foreign instruments. The result is that a large share of domestic savings will be used to finance domestic investments."
