Nigeria has a formal and active capital market, with about 200 companies listed on The Nigerian Stock Exchange, a self-regulatory organisation (SRO). Government oversight of the market is provided by the Securities and Exchange Commission (SEC). It is estimated that there are five million private and institutional investors in the Nigerian market. According to The Nigerian Stock Exchange, foreign investors currently account for 81% of the inflows into the market.
Since 1995, the Nigerian capital market has been open to active foreign participation, following far-reaching changes in the regulatory framework of the market that worked to abolish restrictive exchange control rules and foreign ownership limits, among others. There is also a shift towards the institutionalization of the market, with a breakdown of the local investments in 2011 showing local institutional investors as accounting for 91% of the inflows.
But for a handful of exceptions, all of the companies listed on the Main Board and ASeM, the board for small and medium enterprises, have at least 20% and 15%, respectively, of their issued share capital (ISC) in the hands of the general public, in keeping with the Listing Requirements of The Nigerian Stock Exchange. Also, a few of them have their shares listed on exchanges in London, Johannesburg Accra, and Abidjan.
The wide network of market intermediaries includes stockbrokers, fund managers, corporate finance advisers, and financial advisers. Private equities and venture capital firms are also becoming a common feature of the market.
Internationaalisation, privatisation, growing shareholder activism and the need for foreign capital as supplement to domestic savings are currently driving the adoption of IR practices by an increasing number of Nigerian companies. Also, in recent times, The Nigerian Stock Exchange has taken to preaching the IR gospel to its listed companies as part of the strategy to drive market recovery.
However, it is immediately obvious that there is still so much ground to be covered in the adoption of professional IR practices in this market. Most public companies are implementing IR more as a fashion than for the value the practice brings to the table. Many companies are failing in the most basic areas of IR practice, with The Nigerian Stock Exchange suspending a large number of companies for failure to comply with elementary post-listing requirements. Furthermore, these companies have not leveraged the possibilities of the Internet to occupy more public space and thereby get closer to their shareholders and the larger investment community. Where IROs exist in these companies, they function more as an extension of the office of the Registrar!