The Nigerian Stock Exchange is close to hiring external advisers as it prepares to distribute shares to its members and hold an initial public offering, said Chief Executive Officer Oscar Onyema.
The Lagos-based bourse aims to submit a plan for sale as long as there are no “legislative issues,” Onyema told Bloomberg in an interview today at the World Economic Forum in Davos.
Onyema is seeking to boost trading in stocks after a 47 percent rally in the market’s all-share index last year as the exchange of Africa’s most populous country targets a $1 trillion market value by 2016 from the current $84 billion estimated by Bloomberg, Africa’s biggest after Johannesburg. The continent’s second-biggest economy and largest oil producer is set to expand 6.75 percent this year, according to West African nation’s Finance Ministry.
The Nigerian gauge is still down 38 percent from a March 2008 record, tumbling after a debt crisis caused by investors borrowing to buy stocks before prices crashed. The Securities and Exchange Commission needs to release guidelines on the demutualization process, Lagos-based Media reported, citing an unidentified stockbroker who asked not to be identified.
The bourse intends to list global depository receipts this year and has identified about 20 companies that domestic investors would like to trade, said Onyema.
Elections next year will probably cause unease for investors in Nigeria’s capital markets as the Federal Reserve continues with tapering its quantitative easing program, he said.
“The uncertainty around the election presents challenges for us,” Onyema said. “International portfolio managers will be more discerning” and “we continue to brainstorm how to manage that risk,” he said.
President Goodluck Jonathan’s ruling Peoples Democratic Party is facing its biggest test since the end of military rule in 1999 after a series of defections to the main opposition party. While the government has said it plans to stick to its budget targets this year, central bank Governor Lamido Sanusi has warned of the threat of rising spending. Expenditure climbed 17 percent before the 2011 presidential vote.
“We believe Nigeria continues to remain a very strong investment destination when you look at frontier markets,” Onyema said.