Nigerian capital market: Issues, problems and prospects

Abstract

This article appraises the legal and institutional frameworks of the Nigerian Capital Market and the extent to which the market has achieved the purposes of those frameworks. It identifies some core issues and problems faced by the market and investors which include ensuring certainty of contract and protection of property rights of investors, efficacy of information disclosure by publicly quoted companies in prompting investment and securing the value of investment, protecting investors from unfair practices by corporate insiders and professionals, and systemic protection against financial failure of market professionals and participating financial institutions. It found the regulatory institutions and law adequate in structure and contents. However, it established that information disclosed by securities issuers is to complex for the understanding of most retail investors. Added is weak enforcement regime in the face of which regulation failed to prevent abuse of securities clearing and settlement procedure, market rigging and other manipulative activities of core market operators and corporate insiders, including violation of margin regulations through excessive insider borrowings and securing of repayment of bank loans with the securities purchased with the loans, with contagious effect resulting in failure of the lending institutions. It concludes that the market has prospects, but demands purposeful regulation to ensure fair, efficient and transparent dealings for the protection of investors and the economy.