Capital market needs expansion to boost economy – Uwaleke

The current size of Nigeria’s capital market is too small to impact meaningfully on the country’s economy, a financial expert, Prof. Uche Uwaleke, has said.

Uwaleke, who is the first professor of capital markets in Nigeria, said one of the challenges of the Nigerian capital market is the fact that its size is small relative to the country’s economy as it currently contributes less than 20 per cent of the country’s Gross Domestic Product (GDP).

During an exclusive interview, Uwaleke said, “Market liquidity as measured by trading volume and turnover is comparatively low. The issuer base is not diversified. More specifically, industry composition in the stock market is concentrated in a few.

The financial expert said the relatively small size of the market also paves way for foreign investors to determine the pace and operations of the market.

“Foreign investors are significant players in the equities market often dictating the pace of market activity. This leaves the market vulnerable to external shocks. At another level, the private bond market is very small compared to that for the government,” he added.

The don said although it is relatively small, the market has made some progress in terms of available asset classes which had been expanded to include Exchange Traded Funds.