AFKInsider Market Journal Spotlight On Nigerian Stock Exchange CEO

By Ryan Hoover AFKI Original Published: July 2, 2014, 11:10 am
Invest in Nigeria

Maybe he should be known as Oscar the Hammer.

The Nigerian Stock Exchange (NSE) has unveiled a slew of new products and reforms since Oscar Onyema was appointed CEO in April 2011. Under his watch, the NSE has introduced securities lending, short-selling, exchange-traded funds, and an alternative market for small businesses.

Perhaps less well known, however, is Onyema’s tireless work to restore discipline and build confidence in the market.

On June 23, he announced the NSE’s intention to de-list 21 companies for failure to report financial results in a timely manner or to comply with exchange rules. If de-listed, a company’s shares can no longer be traded on the exchange, making it substantially more difficult for them to raise capital.

As one might expect, the decision to de-list wasn’t entirely popular.

Shareholder groups decried the move, saying that investors would suffer and that the affected companies should be given more time to get their affairs in order.

Moreover, the NSE is home to just 195 stocks, so removing 21 from the roster results in a significant reduction in annual membership revenue. This likely gave pause to some within NSE leadership.

But Onyema was unmoved. “You cannot be a listed company and go two or three years without providing a financial statement to the public,” he said. “This regulatory action is necessary in order to protect the investing public from trading in securities of entities with no current information regarding their financial status.” In other words, without access to recent financial results, buying shares isn’t investing – it’s speculation, and it will result in lots of people losing lots of money.

The concerned companies had plenty of advance warning of the de-listing decision. Onyema and his team launched a weekly compliance report in 2012 which calls out companies that are delinquent in their financial filings or that have otherwise breached exchange rules. The report is also published on the home page of the NSE’s website in order to keep investors informed.

Here’s a partial list of the latest in a long list of reforms and disciplinary actions that the NSE has undertaken during Onyema’s short tenure at the helm:

  • In 2013, the NSE collected roughly $650,000 in fines from listed firms and stockbrokers that had run afoul of exchange rules. Most of the infractions pertained to late and incomplete financial filings.
  • To make it easier for listed firms to remain in compliance with filing rules, the NSE launched the X-Issuer portal in March 2013. This online application allows company managers to submit financial results remotely. This not only accelerates the publication of financial results, it also presents them in a standardized format, simplifying investment analysis.
  • X-Alert, a trade alert system that notifies investors by text or email message, was introduced in February this year. The system is intended to prevent stockbrokers from engaging in unauthorized trading in their customers’ accounts, a practice that had been disturbingly commonplace in years past.
  • Onyema has also worked hard to create an investor safety net. The NSE’s new Investor Protection Fund compensates investors in the event that they fall victim to fraud or negligence by stockbrokers.
  • Finally, and perhaps most importantly, the NSE began rolling out a market-making program in the first half of 2012. Market makers help ensure that there is always a willing buyer and seller for a stock. This builds confidence in the exchange because investors know that they will be able to exit their investment quickly should the need arise.

These innovations and reforms have borne tangible results. The NSE’s All Share Index has risen 61.1 percent in U.S. dollar terms over the past 36 months, and trade volumes have increased from an average of $71 million per week three years ago to $139 million today.

It’s inspired, responsible leadership like that coming from Onyema and his team that keeps investor excitement alive about the African growth story.

Ryan Hoover is an investment analyst with Africa Capital Group and the founder of Contact him at

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