Nigerian CommunicationWeek

Bad Call for Listing of ICT Firms on the NSE

The renewed call for ICT firms to list on the Nigerian Stock Exchange (NSE) is retrogressive and at variance with the federal government’s foreign direct investment policy.

It makes a lot more sense if companies which have risked everything to grow their businesses without government support willingly decide to add new investors.

These companies on their own know that further expansion by way of addition of new investors will benefit them.

Companies become public entities for different reasons, but usually to raise additional capital.

That is why the recent call by Mrs. Omobola Johnson, minister of Communications Technology on ICT firms to list on the NSE is shocking.

Johnson had argued that the  Nigeria’s telecoms sector is the fastest growing sector of the Nigerian economy for the last five years, with year-on-year growth at an average of 22- 23 per cent and contributing 8.3 per cent to Gross Domestic Product, GDP, as at the second quarter of 2013.

There is no denying that fact.

But according to her, it is, therefore, appropriate that many more Nigerians should benefit from this success through the increased public ownership of the companies, stressing that this can only be when they are listed on the stock exchange.

But that was an extreme exaggeration of the fact. 

It was the same inordinate that prodded the House of Representatives last year, to tinker with a law that will compel the operators to list their companies.

That idea has since died out of its own frivolity and uselessness.

The decision to sell shares to Nigerians should not be subjected administrative or legislative intimidation.

It must be the commercial decision of the ICT firms concerned to get listed or remain as a limited liability company.

Instead of coercing the firms to go public, Nigerians should find a way of making these companies contribute to various corporate social responsibilities.

At best, urging ICT firms to list on the exchange amounts to putting the cart before the horse.

For now, the minister and her counterpart in Finance should be concerned with providing fiscal and legislative backing for clear and unambiguous set of rules that local and foreign players can relate to using best practice benchmarks.

Caution also needs to be exercised because the listing of major ICT firms like GSM service providers may have negative impact on the development of the stock exchange.

This is because the listing of major telcos might result in run on other stocks because investors are likely to pull out profits already invested in the market to buy shares in these companies.

And with all due respect, the capital market at present does not have the capacity nor the liquidity to sustain a few telcos because of the paltry average daily trade value of $14 million.

The most important thing to do now is to shore up public power supply that will create large numbers of small and medium scale companies that will list that the exchange.

Also lawmakers must ensure that the laws of the land are strengthened to deal with demands of modern times.

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