Leadership (Abuja)

23 April 2014

Nigeria: Insecurity - Stock Market Loses N392 Billion in Four Months

The stock market has lost a total of N392billion since the beginning of the year partly in response to growing insecurity in the country, a review of the performance of the market by LEADERSHIP has shown.

Analysts in the financial sector have, therefore, called on the federal government to take decisive steps to end the Boko Haram insurgency by unmasking its sponsors, arresting and prosecuting them so as to restore confidence to the Nigerian system.

A stockbroker and analyst, Tunde Ogunje, said the increasing rate of insecurity in the country does not encourage investment inflow, noting that most investors consider the safety of lives and properties while looking at the prospects of a country.

He noted that investors were already wary of the challenges that come during an election year and some would hold back from investing, adding that the recent bomb blast in Abuja was also likely to add to their fears.

According to the director-general, Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, the Abuja bomb blast has portrayed the country in bad light and the implications are negative for the economy, particularly for foreign investors.

According to him, the incident is not good for the country's image as it would be perceived as unsafe for investments.

He called on the government to strengthen intelligence as this is critical to any strategy in tackling terrorism and insurgency.

National president, Association of Senior Civil Servants of Nigeria (ASCSN), Comrade Bobboi Bala Kaigama, also asserted that more effective intelligence surveillance would assist a great deal in unmasking the sponsors of the sect.

Also contributing to the issue, a capital market consultant with Deloy Consulting, Mr. Tunde Oyediran, also affirmed that insecurity posed a lot of concern, especially for capital market operators, noting that investment thrives well in a secure environment.

He stated that the senseless killing of innocent citizens was sending wrong signals to foreign investors that Nigeria was not safe.

Speaking in similar vein, the managing director of APT Securities & Funds Ltd, Alhaji Kasimu Garba said that the bombing incident in Abuja hoisted a red flag over the country in terms of investments.

He stated that security was a big issue and urged those in government to take it as a big challenge, saying that the earlier it is addressed in the overall interest of the economy, the better for the growth of the economy and the capital market.

He noted that the insecurity in Nigeria was having adverse effect on the economy as confidence is being eroded on a daily basis in local and international investors, adding that Foreign Direct Investment (FDI) that would have created additional job opportunities and enhance the living standards of Nigeria will not come to the country at this period while the local investors are also afraid of setting up new businesses or expanding existing ones.

For the managing director, Lambeth Trust and Investments Ltd, Mr. David Adonri, the escalating insecurity in the country was inimical to continued investor confidence in the Nigerian economy.

He pointed out that the capital market was highly sensitive to strife and insecurity, saying "it suffers the most under uncertainties due to ease at which financial assets can be disposed."

On his part, chief executive, Financial Nigeria, Jide Akintunde, stated that the physiological defence that the nation's capital is protected is broken and investors would be cautious in making new moves into the country.

To him, "There is no company that wants to invest in this country that would not have to go to Abuja for one thing or the other because all the government agencies for registrations and permits are all there, and if the place is no longer safe, you can imagine."

Akintunde further stressed that the government need to "make effort that would be seen as different and credible to end the scourge of terrorism, not just in Abuja but also in all parts of the country."

He noted that as long as terrorism continues to thrive in the northern part of the country, the whole country would be seen as unsafe.

Although some other operators are worried about the deteriorating security situation in the country, they are of the opinion that it has yet to impact negatively on investment in either the stock market or other sectors of the economy, especially in parts of the country that have been relatively peaceful and stable.

Mr. Aggrey Otakpor, a stockbroker with Royal Trust Securities Ltd and a dealing member of the Nigerian Stock Exchange (NSE), said the adverse impact of insecurity in the northern part of the country has yet to be felt in the stock market because the security concern is not all over the country.

He attributed the bearish situation in the stock market to the policy initiated by the Central Bank of Nigeria (CBN) which has squeezed out liquidity from the market.

Also commenting on the development, Dr. Donald Obaseki, an operator in the real estate sector of the Nigerian economy, remarked that the prevailing insecurity situation in the northern part of the country was not affecting investment in the country because most parts of the country were safe.

In the same manner, some discerning foreign investors are cashing in on the large population and cheap labour in the country to expand their operations in a bid to maximize the opportunities available. One of such multi-national companies that are making huge investments presently is Procter & Gamble which recently inaugurated a $300 million (about N5 billion) factory inAgbara, Ogun State.

For some of these companies, terrorism has become a global issue and not just limited to Nigeria.

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