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We'll Enhance National Savings, Participation in Capital Market - - Okumagba

August 17, 2014

The newly elected President of Chartered Institute of Stockbrokers, CIS, Mr. Albert Okumagba is a proven technocrat, an astute financial services professional and a strong advocate of good governance. HE is the Group Managing Director/Chief Executive Officer of BGL Plc.

He is also the Chairman of BGL Securities Limited, BGL Asset Management Limited, BGL Private Equity Limited, I-skill Limited, and Immersion Marketing Strategies (IMS) Limited, as well as a member of the board of directors of NASD Plc. Prior to joining BGL ,he was Manager and Head of Mergers and Acquisitions at Centre-Point Bank Plc (now Unity Bank Plc). In this interview with newsmen, he spoke on a lot of issues affecting the financial markets and how his administration intends to reposition the institute.

As the new President of CIS, are there things that you want to address immediately in order to reposition the institute?

I would like to improve national savings mobilization for critical investment growth and to expand the participation rate of Nigerians in the capital market. Our goal is to expand the access to our certifications by varied but related professionals.

We would therefore immediately embark on the expansion of the certification programmes as well as the frequency of the examinations. We would also align the programme to America FINRA and UK CISI curriculums in the light of the unfolding sophistication of our markets.

We intend to transform the examinations from paper based to electronic format to expand access at minimal costs to both the institute and members at all levels.

The status of CIS as the foremost capital market professional body needs to be enhanced. This requires a combination of brand restructuring and improved access and engagements with stakeholders. In this regards, we will ensure that in the next 18 months CIS moves to a befitting structure that would house our secretariat.

This suitability of the institute's structure would go a long way in having impact on the institute as a brand.

We would also embark on brand projects that would situate the institute in the rightful place in the financial market and the Nigerian economy and make it a strong brand across Africa and globally. An important component of this is to work with the National Assembly on the speedy passage of the CISI Bill.

How would you improve the financial strength of the Chartered Institute of Stockbrokers?

The existing sources of revenue to the institute are registration fees, exam fees, sale of study packs and other materials and subscription. We however intend to add to these existing streams of income and also restructure the fees charged by the body across its various operation stages in order to make them competitive.

The recent inclusion of diploma certifications offer opportunities to enhance financial strength of the institute while expanding the scope of the institute. We would further expand the diploma programme as a tool for revenue expansion.

Furthermore, since there is a direct relationship between membership figure and revenue, the current effort aimed taking student population to 150,000 or more is another step in ensuring that the financial strength of the Institute is improved. We will sustain this process with significant emphasis on the Diploma programme without compromising the integrity of the Institute.

You have been talking about growing the membership of the Institute, what is your strategy?

A lot has gone into expanding the membership base of the institute in the last few months.

I will like to list some of the strategies being implemented to increase the names on the institute's register of students and members. One, the curriculum and the variety of certification that the Institute offers are being reviewed with a view to making them more attractive and giving potential members many options.

Secondly, the introduction of the monthly diploma certification exams for post-secondary school candidates posits significant potential for membership expansion. We are currently reviewing the requirements for registration for the Diploma certification to further broaden its scope to accommodate other professionals with interest in the CIS programme.

This monthly conduct of examination is to run from September 2014 to August 2015 with the requirement being Secondary School Certificate across West Africa. We are also expanding the CIS programme beyond the shores of the Country to the West African Sub region and beyond in the long run. In this regard, all the exams will become bilingual (English & French) with exam centres computerized.

It goes to say that the institute's certificate becomes easily accessible by both Nigerians and non-Nigerians who are beyond the borders of the nation. Furthermore, a new curriculum scheme patterned after FINRA of America and CISI of the UK is to be launched.

What is the attitude of foreign Investors to investment through the Nigerian Stock Exchange in the wake of on-going insecurity situation in the country?

The attractive valuation of the most of the stocks on the Nigerian bourse as well as the very competitive real return of the economy make it difficult for foreign investors to take their attention away from our market.

The return potentials as a major frontier market, more than compensate for the risks that the incidence of insurgencies in some parts of the country pose to foreign investment. We are however of the opinion that the earlier we are able to nip this challenge in the bud the better for the Nigerian capital market in the medium to long run.

All stakeholders in the market, the SEC, NSE, Trade Groups and of course CIS are also keenly interfacing with foreign investors to allay or clarify risk perceptions.

Under the new regime of Information Technology whereby many dealing member firms trade from their offices, is it not possible for a non-stockbroker to trade from an office?

It is not impossible that some dealing members allow non-certified brokers to trade through the remote platform from their offices, it is however a major infraction of market rules and also exposes such dealing members to risks that are of high magnitude due to high probability of errors.

The incentive for an average dealing house to take such risk is very low. The X-GEN, which is the new trading platform used by the NSE, supports seamless remote trading and offers benefits such as direct market access and automated trading by investors through their dealing houses' online platforms.

The X-GEN is highly scalable and therefore able to cater for wider participation by retail participants via various devices like smart phones which are easily accessible.

In other words, without compromising the importance of certified brokers, the market has now been further decentralized to investors at different levels. This democratization of trading is also underpinned by the current tech-savvy and keen-eyed SEC which ensures that risk is still properly managed.

What can be done to attract more investors into the Nigerian Stock Exchange?

It is important to note that a lot has been done by the new management of the NSE in recent time that has expanded interest in the Nigerian stock market and would continue to support increased attraction of the market to the rest of investors at home and abroad. Improved trading platform, market transparency, corporate governance drive and market information are areas the management of the Stock Exchange deserves commendation among others.

Additional incentives in the areas of competitive transaction costs, stricter enforcement of listing and trading rules and regulations, as well as expansion of market depth are other areas that could attract investors to our market.

Do you subscribe to the plan by the National assembly to compel companies to list on a stock market?

Getting companies to list on the exchange is a laudable idea and a good step in the right direction.

It is however arguable that forcing companies to list on the Exchange might send a wrong signal on the attractiveness of the Nigerian Stock Market on its own as a beneficial platform for corporates' capital management.

While I recognize that there are sizeable entities outside the market across the oil and gas, telecommunication, fast moving consumer goods (FMCGs) and conglomerates that would deepen the Nigerian capital market by listing their shares on the Nigerian Stock Exchange (NSE).

I am of the opinion that the stock market should woo them with incentives that create significant attraction to list their shares without compromising the corporate governance and market transparent stance of the market.

A good place to start, which the current management of the NSE is driving, is the review of incentives such as listing costs and fees. The Securities and Exchange Commission (SEC) is also very eager to see that more companies are listed on the Nigerian Stock Exchange.

Again, we have argued that the government of the federation could lead by example by executing some of the privatization of public enterprises programmes via the stock market. The ongoing Power Sector Privatisation in which 18 power firms were sold to private investors is a classical case in point.

The sales of the NIPPs are still ongoing with little or no consideration for the use of the capital market platform. We believe that where government execute these transaction via the stock market, the desired US$1 trillion Market Capitalisation (N167 Trillion) target could be reached easily while providing credible examples for multinationals and largely indigenously owned companies to follow.

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: AllAfrica

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