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INTERVIEW WITH:
EVANGELIST HAYFORD ALILE,
DIRECTOR GENERAL NIGERIAN STOCK EXCHANGE
April 1st, 1999 |
FORBES: Could you just
begin by giving us a brief history of the Nigerian
Stock Exchange?
ALILE: Well, the Exchange used to be known as the
Lagos Stock Exchange and was set up in 1960. It
became operational in 1961. Purely a private sector
platform for raising long-term capital, administratively
trading securities, what have you. It also has no
what they call bearer’s bond, it’s agreeable
securities traded herein such and such. Initially
it really served the government, in raising long-term,
debit instruments for meeting projects at the Federal
and also at the state, levels. But up to 1985 it
was about 60 percent dominated by government securities.
And since 1986, when the tide changed; today we
have about 90 to 95 percent of market capitalization,
in equities, small, non-government funds and instruments-bond.
FORBES: As you said just now there is a private
sector enriching bond in the NSE. With the privatization
programme now in full swing, how much bigger do
you expect the NSE to grow?
ALILE: Well, we have had a first phase of privatization,
and also state governments privatizing, more than
ten twelve years now, we hope that government calls
us as they have been promising to do, but we will
certainly impart some breadth into this market.
What volumes, I don’t know because nobody seems
to be privy to the balance-sheets of these government
parastatals.
FORBES: Well, could you just tell us maybe how
many companies are quoted on the NSE right now and
how many you expect to be quoted in the next two
years?
ALILE: We have 186 equities right now, and about
80 additional securities which are guilds, industrial
bonds and pro fem stocks and some unit trusts, something
similar to a derivative. So all together that will
be 283 or 287 securities quoted. In the future we’ll
see more dynamics. The population will begin to
be fully aware of what the capital market is all
about. The depression of the last five years has
taught a lot of businessmen some bitter experience
that we need to depend on reliable long-term funds,
equities from the capital market. So, we’ll
see that in the next 5, 10 years, this market will
be almost 4 or 5 times what we have today.
FORBES: There’s been a lot of controversy
recently because of some factions within the Nigerian
business world who want to set up an abridged Stock
Exchange which is going to predominantly have the
new, privatized companies on it. how do you think
this development is going to affect the NSE if it
comes about to …?
ALILE: I don’t think the controversy is in
the private sector at all, it’s not. There
is a move that was made by the past administration
to set up a Stock Exchange and I think philosophically
it was in the wrong direction. Government has now
come to a conclusion that the private companies
and utilities that government has been managing,
call them parastatals, have failed woefully. Government
by this token, that report you are alluding to is
proposing to set up its own private Stock Exchange.
(That) Infact is another parastatal. To use a parastatal
stock-market to privatize failed parastatals, I
think is philosophically misleading, and we hope
that they survive with it.
FORBES: Do you think this (new) Stock Exchange
is going to come about at all? Or that this is just
a conflict and em, …?
ALILE: It’s being talked about these past two
years. So, we are looking art it … in the best
interest of our country, that money is not wasted.
FORBES: This is leading us to a different thing.
In the past, it’s taken up to 6 months for
shareholders to get their certificates. What measures
have you put in place to ensure that (clients) get
them as soon as possible now?
ALILE: Yes, you know, Nigeria is a very interesting
place, everybody knows his right. So, certainly
they were distracting from the system, (of) hand-delivering
share certificates. I would say perhaps about 4
or 5 percent were not receiving their share certificates
on time. Now we have put together a central depository
system, which is, features electronic registry.
We meet all the international standards of "Tee
plus file" transaction date, transfer business
date, so that you get your share certificate, if
you want, but otherwise we would want to see that
this market is certificate-less, paper less in the
next four years.
FORBES: So in fact we are going to see a lot
of paperwork, a lot the paper you see at the moment
would soon be out.
ALILE: You’re quite right.
FORBES: So, what are the other advantages that
you can tell me of this modernization of technology?
ALILE: The first is the supplement to workers there
used to be some default. Either delivery versus
payment, or sometimes you’re paid before you
even trade it. so, it’s a much more efficient
and perfect market and the investors (favour) it.
FORBES: Mr. Denis Odife and his panel, sometime
ago accused the NSE of poor and unimaginative management,
which they claim has spoilt the monetary market
for 36 years. How do you respond to this?
ALILE: Well, they know that 80% of the activities
of this economy have been in the hands of government.
And it has taken up to 10 to 15 years for this government
to privatize their wares. And today, in spite of
the first, second phase of privatization I can still
say about 65 to 70 percent of business activity
and capital formation are still in the hands of
government. You know that hydrocarbons contribute
about 95% of our foreign exchange earnings, about
37% of our GDP. And all these things are in the
hand of government. So they are the largest, just
capital fronts men in the economy, and also the
largest "entrepreneurs" in the economy.
So we have to wrest these things from them. Most
of their conclusions were really to justify the
Abuja Stock Exchange that they had in mind to do
some few things, which history will reveal to us.
| FORBES: Of course,
Mr. Odife’s comment was just one point of view
anyway. In 1996 the International Finance Corporation
(IFC) rated the NSE as one the top three in the
world in terms of investments, and 7th in terms
of growth. How have you been encouraged by these
findings and how have you improved on them?
ALILE: Well, it is not only in 1996, 1997, but if
you look back, IFC has always been rating this place
as one of the 5 leading stock markets in terms of
returns on investments in spite of the mismanagement
of the economy. What has helped this place is integrity
of the top. Two, our listed requirement, the way
it’s been applied, post-listing, to make sure
that Chief Executives of quoted companies are put
on their toes, we relate with them on a daily basis,
far beyond what my colleagues even do at the New
York Stock Exchange. We go beyond our official duty
to make sure that Chief Executives of the quoted
companies are able to anticipate, 2, 3, 4, 5, years
ahead. By and large, quoted companies here are far
better (off) than the government of the economy.
FORBES: When we are talking about one of the
best Stock Exchanges in the world, could you give
us a percentage, an average percentage of how much
is …
ALILE: Thank you very much. Out of … the last
14, 15 months, lave terribly bad for the economy,
in fact our own index dropped by about 53%. But
before then, if you look at the 5 years, we are
talking about an average 35% (returns) in dollar
terms.
FORBES: Your capital in 1995 was 171.1 million,
in 1996 it was 260 billion what was it in 1998?
ALILE: Eh, that 1998 I think it’s coming down
to about 200 and something, no 1997 was far less
than the figure you gave. Er, it was about 292.9
billion in 1997. In 1998, it dropped to 263.3 billion.
FORBES: It has been more or less increasing in
the last few years; every year generally, the Stock
Exchange…
ALILE: Yes, yes, certainly.
FORBES: Em, so, the NSE may be on to some more
product inspection; if the NSE has played a dominant
role in West Africa already, for example training
staff of the guards of exchange. With the advent
of US machine trading system which is big enough
to serve all the Exchanges in West Africa, what
exactly do you imagine the role of the NSE to be
in the future of the African Continent as a whole?
ALILE: Well, I would say it’s about 6 years
ago, three Chief Executives put their heads together:
Johannesburg Stock Exchange, Nairobi and the Nigerian
Stock Exchange to look at the continent of Africa
and bring all the Stock Exchange together, encourage
in line with the directives of the Heads of state
of the OAU (Organization of African Unity), that
all countries should endeavour to have a capital
market. So, the three of us put our heads together
to see how we can work towards the realization of
this dream. And, up till October last year, I was
Chairman of the Association of Stock Exchanges in
Africa. I have standardized things, to help training,
to help in sharing the experiences. Long before
that, we, as you said, we extended our own experience
too, helping Ghana to set up. Fortunately, just
before the civil war in Sierra Leone, we had a request
from their government to do the same thing for them
… so, since then we’ve been trying to
encourage training, workshops for African capital
market operatives. We intend to continue to share
this reservoir of experience we have here with in
the continent as much as possible. Certainly there’s
no doubt in our minds that the hub of West Africa
will be here in Lagos.
FORBES: Then the rest of the West African countries
will jump to the train which you are driving…
ALILE: We hope so.
FORBES: On a more personal level, what would
you say has been your greatest achievement since
you have been Director-General of the Nigerian Stock
Exchange?
ALILE: I think the greatest achievement has been
the training of the personnel for this capital market.
When I got here there were only two or three brokers.
Today we have about a hundred and seventy brokers.
Out of these, a lot of the Merchant Banks including
… Denis Odife was trained here. We trained
him. Managing Director of a Merchant Bank, doing
successful (business). In fact lot of all the Merchant
Banks evolved from this place. So, I am very proud
to see that a lot of brokers that (we trained) are
all right, making contributions to the growth of
the economy. More importantly, I think, what we
have tried to do, is to make this place a bastion
of integrity in business. That is what we have done
in this place (that) today, I think our capital
market can stand… we are here, if there are
any foul jobs deliberately schemed to steal money
from any investor, Nigerian or foreigners; there
are some defaults, we chase after it and rectify
it immediately. The place is known for broad daylight
business.
FORBES: I see. And as a final question, with
the democratic government coming to power very soon,
with the privatization programme on the way in Nigeria
(and) with all the changes which are surely happening
in this country, what would be your message to our
readers in the United States, vis-à-vis the situation
in Nigeria?
ALILE: Well, I would say that the fetuses in the
womb of Nigeria are capitalists. So, this place
has a tremendous entrepreneurial energy driving
it and everybody is conscious of wealth creation,
property ownership. There is a lot of … a lot
of things in common between Nigeria and the (United)
States: belief in good things, belief in creation
of wealth, belief in sharing and fairness …
and our track record is very great. I know the two
countries very well, I went to school in America,
I have very good American tips. I’m inviting
them to familiar terrains, Infact (to) more greener
(sic) pastures, already beating North America.
FORBES: Thank you very much.
ALILE: Thank you. |
© World INvestment NEws, 1999.
This is the electronic edition of the special country report on Nigeria published in FORBES Magazine,
May 31 st issue.
Developed by AgenciaE.Tv |
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NIGERIA
