ABSTRACT
The researcher’s mind on the topic,
“The impact of the Capital market on the Nigerian Economy with emphasis on the
role of the Nigerian Stock Exchange” was captured when a similar topic was
discussed at a seminar organized by the Bureau for Public Enterprise (BPE) to
conscientize and sensitize Nigerian people to accept the privatization
programme. The organizers sought to expose how highly underutilized the
Nigerian Stock market is and what individuals and Corporations would gain in
patronizing the market. They also compared the operations and volume of
transactions with other emerging stock markets in the world. The research work
is basically, all about assessing the extent of the impact of the capital
market on the socio-economic development of this country and an in-depth search
into ways of improving upon the operations of the Nigerian Stock Exchange. In
his findings, the researcher noted (among other things) that there was
underutilization of the Stock Exchange market due to poor enlightenment
campaign, and lack of transparency and accountability on the part of the
operators of the market. In the conclusion, the researcher admitted that the
future prospects of the exchange market is still bright but emphasized that the
operators of the market must engender accountability and transparency as this
will go a long way to re-installing much desired confidence in the investing
public and guarantee the market’s future development.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Nigeria
has a formal and active capital market. Before 1961, nearly all formal savings
and deposits went through the banking system while the then colonial masters
invested major capital balances for the country on the London stock exchange.
However, following the establishment of the CENTRAL BANK OF NIGERIA in 1959, it
was logical to have a stock exchange in 1960, which commenced operations in
1961. Thus, the foundation was ordered for the operations of the Nigerian
capital market. The capital market tends to provide a forum for the interaction
of the economic surplus and economic deficits to attract business under a
highly regulated environment.
Earlier
in 1959, the Central Bank of Nigeria had floated the first Nigerian development
loan stock, which was listed overseas. Subsequent issues in 1961 and thereafter
were listed on the new local exchange.
The
Nigerian stock exchange is a private, non-profit making organization limited by
guarantee. It was incorporated via the inspiration and support of businessmen
and the federal government through the CBN, owned by about 300 members. The
membership includes financial institutions, stockbrokers and individual
Nigerian of high integrity who have contributed to the development of
Dealing
members of the stock exchange are the stock broking firms licensed by the
exchange to purchase and sell shares on behalf of the investing public. There
are over 200 of them at the moment.
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