Knocks as stakeholders assess Buhari one year after
• Investors want govt to prioritise stock market issues, tackle insecurity, others • NSE All- share index plunges by 24 per cent in 12 months
WITH the unprecedented lull witnessed in the nation’s stock market in the last one year, culminating to a loss in the All- share index increase by 24 per cent, stakeholders have stressed the need for government to position the market at the centre of policy formulation in order to achieve a more vibrant and competitive market.
The stakeholders, while assessing President Muhammadu Buhari’s one year in 2nd term noted that the socioeconomic situation in Nigeria in the past one year of President Buhari’s tenure impacted negatively on the capital market.
They identified insecurity, unfavourable operating environment, lack of incentives, corruption and inconsistent government policies as factors inhibiting the growth of the nation’s capital market and consequent contributions to the economy.
Indeed, the All- share index of the Nigerian Stock Exchange ( NSE) which stood at 31, 307.00 as at Tuesday, May 28, 2019, the eve of the 2nd term inauguration of Buhari as President, now stands at 25, 204.75 at close of trading on Friday May 22, 2019 shedding whooping 6,102.25 points or 24.2 per cent.
This was in spite of various efforts put in place by the regulators to boost investors’ confident as restore the market on the part of sustainable recovery.
From a six per cent Gross Domestic Product ( GDP) six years ago, to recession in 2016, with post- recession’s fragile recovery below two per cent till date, and now predictions of imminent recession in 2020, it’s been no respite for both the citizenry and economy.
It is noteworthy that the nation’s economy had been grappling with weak recovery from the 2014 oil price shock to the 2016 economic recession with GDP growth tapering around 2.3 percent in 2019.
Capital market operators argued that the first year of the 2nd term of President Buhari has not differed from his previous years in power. According to them, insecurity has continued to permeate the length and breadth of country under his watch.
Specifically, the Vice President of High cap Securities, David Adonri said: “While Boko Haram continued their reign of terror in the Northeast, Fulani bandits made the
Northwest and Middle belt ungovernable. Occasionally, the bandits extended their criminalities and violence to the South.
“From macroeconomic perspective, major economic indicators performed low. The GDP grew by paltry 2.25 per cent in 2019, way below population growth rate of over 3.5 per cent . Inflation rate started to inch up in 2019 closing in double digits at 11.85 per cent.
‘“External reserve dropped to about USD 39Bn while unemployment rate soared to about 30 per cent. In summary, the economy faced very severe socioeconomic difficulties during the first year of President Buhari’s administration.
“The situation is even worse now with the catastrophe of Covid19. Although the crude oil market started to recover in 2019, it finally collapsed when crude oil price per barrel fell below USD 0.00 on Monday 20th April 2020. Even before onset of Covid19 in Nigeria, Fitch and Moody’s had downgraded the country from stable to negative.
He continued;” The socioeconomic situation in Nigeria in the past one year of President Buhari’s tenure impacted the capital market negatively.
Buildup to 2019 general election was a disaster for the capital market. Frightened foreign and domestic investors exited the market, which plunged it into liquidity crisis from 2nd quarter of 2018. As a result, the Market lost 17.81% with All Share Index ( ASI) of the NSE closing at 31,432.09.
“The situation further deteriorated in 2019 due to the uncertainties that surrounded the 2019 general elections. The election was adjudged non - credible and fraudulent provoking low investors’ confidence and weak macroeconomic conditions. As a result, the Market further lost 14.6% with ASI closing at 26,842.07 in 2019. As at May 2020, the ASI had fallen further to 23,709.44.
He added: “Severe crisis in the economy, expected to degenerate into the worst form of stagflation arising from Covid19 devastation, could determine the future of this administration, further exacerbated by weak governance at the center.
“There is very little hope that the capital market can be vibrant, liquid and profitable in the foreseeable future under this administration. However, if the President starts to connect better with the people and discontinues his parochial policies, then things can change for the better.”
He urged the president to allow the economic experts assembled in the economic management team to take control and domesticate the economy.
He stressed the need for the economic management team has to ensure that the country focuses on the heavy industrial sector, noting that the underdevelopment of the sector has prevented industrialisation.
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