28th November, 2013
Nigeria’s Securities and Exchange Commission (SEC) on Thursday said about $5.4 billion (N864 billion) has been invested in the Nigerian bonds by foreign investors within the 2013 fiscal period.
The Director General of SEC, Ms Arunma Oteh made this known at the 3rd Annual Capital Market Retreat tagged: “Actualising Nigeria’s Economic Potential’’.
Oteh said that the huge investment in the Nigerian bond was a demonstration of the confidence of investors in the nation’s economy.
She said that the Nigeria’s domestic bond market had greatly benefited from its admission into Barclays emerging market bond index and JP Morgan local currency bond index in October 2012.
The SEC D-G noted that Nigeria’s admission into the international markets had put the country’s local currency bond market within the radar of foreign investors.
She recalled that prior to the admission of the nation’s bonds to any international bond index, foreign investors’ holding of Nigerian bonds was approximately 1.2 billion dollars (N192 billion).
“In April 2013, our domestic bond market got a huge boost following the inclusion of Nigeria’s sovereign bonds in Barclay’s Emerging Market Bond Index. This was in addition to its admission into the JP Morgan local currency bond index in October 2012.
“This has put our local currency bond market within the radar of foreign investors who year-to-date, have invested an estimated 5.4 billion dollars in Nigerian bonds. In September 2012, prior to the admission of FGN Bonds to any international bond index, foreign investors’ holding of Nigerian bonds was approximately 1.2 billion dollars.
“Even Nigeria’s Treasury Bills, which have been popular among international investors, were equally positively impacted by this development with international investor holdings increasing from 3.9 dollars billion to 6.2 billion dollars,’’ she said.
Oteh said that the nation’s bond market could play a key role in bridging the infrastructure gap in the country, estimated at 350 billion dollars by African Development Bank.
She pointed out that because the bond market had potentials for growth, it could compete or surpass the equities market in size as it happens in most advanced economies.
The Minister of State for Finance, Dr Yerima Ngama said it was imperative to address the issue of unclaimed dividend by retail investors in the country, currently estimated at N60 billion.
“Most of the unclaimed dividends belong to small investors, while some cannot even be traced. But these are funds that can be utilised for investment purposes. I wish to affirm that the Economic Management Implementation Team is taking this issue very seriously.
“We have a lot of proposals and before long, we are going to come up with one that will actually boost this market and give confidence to small investors.
“By the time we do this, it would pull their resources together to provide the investment that is critically needed,’’ he said.
Ngama cautioned capital market operators and regulators against being caught in the euphoria of “impressive growth’’ of the stock market.
He urged them to come up with strategies on how to broaden the market.
“So, let us look at the untapped market and find those companies out there that are performing well, but not yet listed on the stock market.
“The Nigerian public needs to be educated on this. Very few people participate in the capital market, and in fact, there is a lot of exclusion in the entire financial market.
“It should be that, no matter how poor you are, you can invest in the capital market.
“You don’t have to buy the shares yourself, but we can have mutual and collective investment comprising so many small investors,’’ he said.