Nigeria to expand Stock Exchange range to lure investors

The Nigerian Stock Exchange (NSE) is looking to attract investors spooked by a weak currency and oil price by offering more products ahead of a possible listing.

NSE CEO, Oscar Onyema

“We would like to give exposure to asset classes that we are not necessarily trading,” a former Wall Street executive who returned home like many Nigerians to tap opportunities in Africa’s biggest economy, Oscar Onyema, told Reuters.

Onyema said that the NSE, one of the main entry points for foreign funds into Africa, plans to launch a clearing house to allow futures and options trading this year.

“It will also change its ownership structure this year, a move that might bring in investors from abroad or lead to a share offer at some stage later,” Onyema told Reuters in an interview at the bourse located in the commercial hub of Lagos.

The exchange, which has been hit by an exodus of foreign investors due to an economic crisis sparked by a slump in oil revenues, saw the total market capitalisation of companies listed there halve to around $42 billion from $86.3 billion in 2007 when the market was booming. Daily trading has dropped on average to less than $10 million, down from $100 million in 2007, brokers say.

“It now plans to add options to its portfolio of products to boost this flagging liquidity and help investors manage risk. To reach that goal, Africa’s second-largest bourse, after Johannesburg, launched a clearing house which will be independent and will have banks, the central bank, and other stock exchanges as members,” the Harvard graduate said.

Onyema also said that the bourse was on track to change its ownership structure this year from a mutual firm of 500 broker members to add shareholders with the aim of improving governance and possibly to open up new funding sources, including the possibility of a share offer.