The Nigerian Stock Exchange has had a long, checkered life. The institution is represented in the consciousness of many people as an iconic multi-storey building located on Custom Street, Lagos Island. But while the high rise structure bearing its name has been a centre for stock trading since 1986, the NSE itself has existed for much longer.
In the late 1950s, the colonial government drew up laws which allowed for the establishment of the basic rudiments of a formal capital market. It had been decided that taxes alone would not be sufficient to fund the public service’s operations; other funding sources were needed. The Central Bank was established in 1958 to oversee, amongst other things, the sale of government securities in the near future. Government interest was instigating the modernization of the financial system.
Two years later, the Lagos Stock Exchange was founded. The way had, in fact, been paved for its existence much earlier, with laws promulgated by authorities to create the legal grounds for its operation. But it didn’t arrive on the scene with a bang; starting off with a mere four trading companies was a relatively simple beginning, even if the listed market dealers were not midgets.
However, the setting up of the LSE wasn’t a public sector initiative from start to finish. There were big private sector fishes involved with it at the very beginning. Akintola Williams, the famed industrialist who founded the country’s first big professional services firm, played a major role in bringing the stock exchange to life. Louis Odumegwu Ojukwu, perhaps Nigeria’s first ever billionaire, was the exchange’s first president. The opening cast for the history of the NSE was stellar by the country’s standards.
Still, the theme of small kickoffs is hard to ignore here. The early stockbrokers of the Lagos Stock Exchange had to do business in a building which also housed the CBN. Formal trading had begun in 1961; in August of that year, the volume of trade at the exchange stood at just over £80,000- a rather meagre amount by global standards, even at that time. But it tripled in about a month. In time, the little flame of the 50s became a roaring bonfire.
The oil boom of the 1970s allowed for rapid economic growth, and the financial markets benefitted from this. The indigenization policy encouraged local investors to take up stakes in various sectors of the Nigerian commercial landscape. As a result, the Lagos Stock Exchange’s participating companies began to be dominated by indigenous people.
In 1977, the LSE was renamed the Nigerian Stock Exchange, to reflect the fact that it wasn’t just serving the city of Lagos. It had begun setting up branches across the country as well. Three decades later, it has 13 centres nationwide, including in Abuja, Abeokuta, Kano, Onitsha, Owerri, Ibadan and Port Harcourt, among others.
These days, stockbrokers buying and selling shares of companies don’t actually have to be in any of the specific branches of the NSE to initiate a transaction. Thanks to smart electronic systems, trading takes place in places outside these locations.
A Few Facts About the Nigerian Stock Exchange
Just in case you’re wondering what goes on in the NSE, here are a few points to help you understand it better.
- A stock market is a place or situation in which people (especially stockbrokers) buy and sell shares of companies’ stocks. These stocks are rights to own a part (or share) of the companies which issue them. The more shares you buy, the greater the portion of the company you own. This is essentially what goes on in the Nigerian Stock Exchange.
- Share prices change fairly rapidly, as you would expect in a free market.
- The Nigerian Stock Exchange is regulated by the Securities Exchange Commission (SEC).
- Trading on the NSE starts off at 9:30 AM and closes by 2:30 PM on weekdays.
- Companies which have been listed on the NSE can have their shares traded on the floor of the exchange
- As at May 2018, 169 companies were listed on the NSE.
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