Okumagba: CIS Has Reinvigorated Advocacy Platforms to Engage Govt

President of the Chartered Institute of Stockbrokers, Mr. Albert Okumagba, in this interview with Eromosele Abiodun, highlighted the challenges facing the capital market, the naira devaluation, and the need for operators and regulators in the capital mark

Since you took up the mantle of leadership of the Chartered Institute of Stockbrokers (CIS) in April 2014, you have been consistent in your call on the operators and regulators in the capital market to work very closely with the government? How far have you gone in this regard?

Well, the process is on-going. Nothing good comes easy. The importance of the government in the economy of a developing nation like ours cannot be overemphasised in the area of directing the economy, formulating, implementing and enforcing policies. As an institute, we have reinforced and reinvigorated various advocacy platforms available to us to engage government in various areas for the good of the country and the capital market, for example, through our annual national workshop, and the capital market alliance consisting of CIS, the Association of Stockbroking Houses of Nigeria (ASHON) and the Association of Issuing Houses of Nigeria (AIHN). And I can assure you, we are making progress.

You have also become a strong advocate of professional associations coming together for cohesive goal. Does this inform the recent signing of a five - year economic development pact by the CIS, the Institute of Chartered Accountants (ICAN) and the Nigerian Bar Association (NBA) in Lagos recently?

Yes it does. We believe there is need for collaboration and exchange of ideas among professionals on subjects of common interest, in addition, to making and/or supporting representation to government and other appropriate agencies of government on matters affecting the parties and the Nigerian economy.

What is the overriding philosophy of this agreement?

We are collaborating to become a stronger force to further the mutual interests of the parties, and the development of the Nigerian socio-economic life.

Recall the one-day dialogue on the capital market and 2015 national budget. What

Okumagba

were the critical underlying actors that enhanced its success?

The underlying factor is the reinvigorated synergy between CIS, ASHON and AIHN in promoting our common interest, and the relevance of the discussion, bearing on the growth and development of the Nigerian capital market within the context of the national budget for 2015. In addition, the invitation of well-experienced speakers with pedigree both from the public and private sectors also enhanced the quality of the discussions.

Any plan to widen the scope of the one-day dialogue and make it an annual event?

Our plan is to make the dialogue an annual event. The forum is designed to engage government on the national budget and other issues in the economy and to position capital market operators for the opportunities and challenges ahead. Most importantly, through the collaboration of CIS, ASHON and AIHN, the capital market will be able to speak with one voice.

The Central Bank of Nigeria (CBN) has again taken some strategic decisions on the devaluation of the Naira. How does this benefit the capital market?

Let’s start by considering the impact on the economy as a whole; devaluation can have both positive and negative effects. On the one hand, it would encourage local industries which can now earn more Naira on their exports with positive impact on our trade balances. On the other hand, it will bring about closure of many companies that depend mainly on imported raw materials as the cost of their inputs will increase significantly upon conversion to their Naira equivalent.

For Nigeria which is largely import dependent, the overall impact will likely be negative in the short run. This could result in negative macroeconomic indices such as higher rate of unemployment, lower GDP and lower industry capacity utilisation. The could immediately lead to a reduction in the profits of some listed companies thereby reducing the potential for capital appreciation and dividend return, hence hurting the capital market.

On the long run however, it is could be a positive development for the economy as manufacturers opts for local substitutes to imported raw materials and the country’s exports become competitive. Corporate earnings become more stable (as they are no longer significantly exposed to foreign exchange volatility) to the benefit of the capital market.

How would you advise investors at this period of uncertainties in the polity?

In a situation of uncertainty such as we are now, the level of risk is higher; hence investors should be cautious. In every crisis, there are both chaos and opportunities. To tap these opportunities, investors with little or no experience should always engage the services of experts to manage their wealth. This should provide them with the benefit of professional advice. I will specifically advise small investors to invest in well-managed funds at this time. The fund managers have the experience to manage portfolios of well-diversified assets for reasonable returns at relatively lower levels of risk.

Finally, this time also presents investors op- portunities to generate abnormal returns because Nigerian equities are significantly undervalued. As the common saying in finance goes the higher the risk, the higher the returns.

Your administration is determined to grow the membership base and raise the income profile of the CIS. Can you relate this to the efforts being made by the institute to leverage on the Diploma Programme in Securities and Investment?

At the CIS, we have been engaged in aggressive mobilisation efforts in the last couple of months. We have signed-on five firms to assist in the strategic growth of our student membership base. These firms have been provided with the necessary training and tools in order to achieve our target of mobilising one million students for our professional Diploma examination. Aside from this, we regularly visit tertiary institutions and NYSC camps for career talks and enlightenment on the benefits of the CIS certifications. We are working with top stock broking firms presently to provide employment opportunities for graduates of the CIS Diploma programme.

You have always been focused on the need to move the CIS to the next level. What should be put in place to achieve these laudable goals?

Our goal is to be a leading professional institute in Nigeria in the next few years. This requires the commitment of all our stakeholders. We need the buy-in of all CIS members, so that they can contribute their own quotas. We are engaging the support of all. We need to strengthen our structures especially the Institute’s secretariat to be able to deliver on expectations. The SEC, all the trading platforms, and Securities and Investment firms also have roles to play in supporting this goal which will be to the benefit of the capital market as a whole.

The CIS is believed to have become more visible under your administration. What is the strategy?

We have taken bold steps to put the institute back to its rightful place. We are impacting on all our stakeholders in various ways. Beyond the capital market, we are regularly contributing our quota to national discourse and engaging the government on relevant issues. We have also taken deliberate steps to inform members and the public about the institute and its activities.

During the 2014 annual conference of the CIS, the focus was on the entertainment industry. Any update?

The conference on the creative industry was an eye opener to the stakeholders in the industry as they were able to appreciate the enormous potential for long-term financing of this major sector through the Nigerian capital market.

There are on-going discussions between capital market operators and practitioners in the creative industry on the modalities for exploiting the opportunities available in the market to further develop “Nollywood.”

Do you have any other comment or advice for the investing public?

Uncertain economic times can bring you down along with the market. But even when the stock market turns down, it is possible to make money. Bear markets are great times to buy stocks at bargain prices. I would advise small investors to focus on well-chosen mutual funds or exchange-traded funds (ETFs). This provides the benefit of risk reduction and professional management.