STABILIZATION FUNDS SHOULD HAVE COME EARLIER

Analysts have said that the bearish trend of activities in the Nigerian capital market have continued because the establishment of the stabilisation fund was not given priority.

According to them, the intervention measures by the Federal Government were not being implemented in the order of importance.

While noting that the rescue measures were in the right direction, they said if implementation was not at the right priority level, it might not have the desired effect.

The Chief Consultant, B. Adedipe Associates Limited, Mr. Biodun Adedipe, said that if the establishment of a capital market stabilisation fund had been implemented on time, the market might have started to pick up.

Speaking during the Securities and Exchange Commission’s workshop for journalists in Kaduna, he said, “The intervention fund by the Federal Government, through the immediate injection of funds into the system, should have been put first.

“Other jurisdictions, which have experienced this same trend, usually implement the intervention funds first.

“This is the reason why the intervention in the Nigerian capital market has not yet brought the desired results. It is because the intervention fund has not been properly applied.”

The Minister of Finance, Dr. Shamsuddeen Usman, however, said on Thursday that with the recent liquidity injection measures taken by the Central Bank of Nigeria, the establishment of a stabilisation fund was no longer required.

But Adedipe advised that there should be teamwork between the CBN, SEC and the Nigerian Stock Exchange to effectively regulate the financial services sector of the economy.

He said, “The pattern and nature of market operations compel collaboration by the financial system regulators. For effectiveness of regulation, regulators must protect investors and represent their interest, and should be fully schooled about the operations of the system.”

He said that the regulators should ensure that they created an enabling environment, if they wanted wider participation from both local and foreign investors in the capital market.

“SEC must be primed to handle issues that have to do with cross border listing and trading, 24-hour trading and other complications in the market. The Director-General has to ensure market integrity, without thinking of the political undertone of the ideas,” he said.

On whether it was right for operators to intervene in capital market activities, the Managing Director, Nigerian Capital Market Institute, Mr. Oluwatobi Oyefeso, said some form of intervention was required.

He said that the regulatory bodies, including the CBN, had been intervening through moral suasion to improve the money market.