The Nigerian Stock Market and Its Impact on the Economy
CHAPTER ONE
OVERVIEW
Nigeria, like many other African countries, was created from a multi-ethnic, socially and culturally diverse people, situated between the Equator and the tropic of cancer, its climate and vegetation can afford the growth of many tropical commodities such as cocoa, groundnuts, palm produce and rubber. Starting from a low technological base after political independence in 1960, the country embarked on the arduous task of building a state with one identity by integrating the different ethnicities and transforming the barter economy into financial exchange economy. The country provided infrastructure and social amenities for a very young population. Over the years, policies were pursued in order to achieve the goal of a balanced national development that reflects the “Federal Character” of Nigeria. Since independence, the search for a political system, which enhances stability for social and economic development, has been going on. In recent times, many developing countries have recognised that a market based economic system needs political institutions supportive of the free market concept. Thus Nigeria, like any other nation, has been involved in political engineering partly to achieve this goal. Like many other African economies, the Nigerian economy has been mixed. However, the level of government participation has been reducing in line with globalisation trend and market base resource rationalisation concept. In this spirit, the Federal Government sold its shares in many firms and privatized and commercialised many other parastatals. The economy, including the capital market, was substantially deregulated. It has been argued that the desire and pursuit of social and economic advancement are natural human instincts hence; man continuously seeks to improve his standard of living; a business organisation its profitability; and a nation, the wellbeing of its citizens, which undoubtedly is the prime essence of governance. Contemporary
OVERVIEW
Nigeria, like many other African countries, was created from a multi-ethnic, socially and culturally diverse people, situated between the Equator and the tropic of cancer, its climate and vegetation can afford the growth of many tropical commodities such as cocoa, groundnuts, palm produce and rubber. Starting from a low technological base after political independence in 1960, the country embarked on the arduous task of building a state with one identity by integrating the different ethnicities and transforming the barter economy into financial exchange economy. The country provided infrastructure and social amenities for a very young population. Over the years, policies were pursued in order to achieve the goal of a balanced national development that reflects the “Federal Character” of Nigeria. Since independence, the search for a political system, which enhances stability for social and economic development, has been going on. In recent times, many developing countries have recognised that a market based economic system needs political institutions supportive of the free market concept. Thus Nigeria, like any other nation, has been involved in political engineering partly to achieve this goal. Like many other African economies, the Nigerian economy has been mixed. However, the level of government participation has been reducing in line with globalisation trend and market base resource rationalisation concept. In this spirit, the Federal Government sold its shares in many firms and privatized and commercialised many other parastatals. The economy, including the capital market, was substantially deregulated. It has been argued that the desire and pursuit of social and economic advancement are natural human instincts hence; man continuously seeks to improve his standard of living; a business organisation its profitability; and a nation, the wellbeing of its citizens, which undoubtedly is the prime essence of governance. Contemporary