Dearth of facilities, bane of capital market growth -Chioke

Except the Federal Government makes concerted efforts to improve infrastructure in the country, the growth of the capital market will continue to be impeded,  Managing Director of Afrinvest (West Africa) Limited, a leading financial services provider in Africa, Mr Ike Chioke, has said.

He said the weak infrastructural base in Nigeria had been a major factor that was retarding the growth of securities market and the entire economy.

Chioke, who made this disclosure at the inauguration of a new market index in Lagos, said the low Gross Domestic Product  (GDP) ratio occasioned by poor infrastructure had contributed immensely to the sustainable downturn in the market.

Chioke noted that, going by all important drivers of a growing economy, Nigeria was still far behind in doing what should be done to get its footing right.

He noted that with strong infrastructure, productivity could be boosted to push the GDP ratio to at least two digit levels of about 10 to 11 per cent.

Chioke said it was important to begin to highlight the aspect of the market that was important to investors, which, according to him, had been in a negative trajectory since the last week of January.

“If you look at the trading trend in 2007 and early part of 2008, the market was recording about N10 billion to N12 billion turnover a day, today we are struggling to get two billion naira. That is why the government should as a matter of urgency fix infrastructure to help create enabling environment for the real sector of the economy which would indirectly boost the nations’ capital market,” he said.

Chioke, speaking on CBN banking reforms, said the apex bank, in its stride to sanitise the banking industry, needed to continually strengthen its capacity to effectively monitor and exert control over players in the Nigerian banking space.

He noted that one of the positive effects of the reforms exercise was that it had allowed Nigerian banks to effectively come clean on the true state of their balance sheets, and provide clear visibility as regarding future profitability.

Chioke said the reforms had also helped to douse widespread fears regarding the true state of health of the banking sector, and to a limited degree, restore investors’ confidence in the market.

He noted that given the current market performance for safety and fixed income, the financial services provider expected money market instruments, government treasuries and sovereign bonds to continue to receive heavier weightings in investors’ portfolios.

Source : Tribune