The Securities market in Nigeria has several levels, including primary, secondary, and OTC markets. The primary market includes stocks and bonds that are traded on the Nigerian Stock Exchange, while the secondary market contains stocks not listed on the exchange. The Nigerian Securities and Exchange Commission (SEC) regulates the market, issuing licenses to operators, registering securities, and prosecuting violations of the securities laws. The Nigerian Stock Exchange regulates organized trading of capital market products and provides settlement services through its Central Securities Clearing System.
The fixed income securities market in Nigeria continues to be dominated by Federal Government of Nigeria (FGN) bonds, with fewer transactions in the State/Local Government and Corporate Bond segments. At the end of December 2015, the yield on the 10-year dollar-denominated bond increased to 8.48 per cent, largely due to improved investor preference for higher premiums and a successful transition programme. The capital market continued to exhibit signs of weakness during the review period, with some volatility in some indices.
The introduction of privatization in the financial system in Nigeria has opened up opportunities for buying and selling securities in the market. This has created new opportunities for greater public participation in the market. Privatization has also created an extensive body of shareholders and broadened the Nigerian Capital Market. This, in turn, has led to more investment and enhanced capital market awareness. And while the private sector has its challenges, there are also several benefits. The privatization process in Nigeria has helped the country become more transparent, open, and competitive.
The NSE is a centralized clearing house that mobilizes public and private savings by providing a means for trading existing securities. The NSE operates a main exchange for large enterprises and a secondary security market for smaller companies. In 1961, the NSE started with 19 securities traded on its floors. Today, it has 279 stocks and a total market capitalization of N 170 billion. The process of listing new securities has become more sophisticated, and the NSE is striving to make it more competitive and efficient.
In order to attract more investors to the capital market, the government should make it easier to invest in it. The Nigerian registrars have established a good relationship with the Central Securities Clearing System (CSCS). The government should make it mandatory for all tertiary institutions to offer courses on capital market investment. A better infrastructure would increase the flow of information. A better information system would make the Nigerian capital market more competitive and easy to pass on.
There is a need to study the effects of the privatization programme on the Nigerian capital market. The privatization process has benefited many Nigerians, but it must remain an important part of the country’s development. It is crucial to study the effect of privatization on the capital market, as well as the performance of the privatized companies. If these privatization projects are successful, they should create a better business environment and increase consumer confidence.