Kasimu Garba Kurfi is the Managing Director/CEO of APT Securities and Funds Limited, a Council Member of the Nigerian Stock Exchange and a major player in the financial market. In this interview with NGOZI AMUCHE, he bares his mind on the current economic situation in the country, the inflation rates and the forex volatility. Excerpts:
Activities in the Nigerian stock market have been on the downward trend, creating tension among operators, investors and regulators. What’s your assessment of this situation?
The downward trend experienced in the equity market is a reflection of the performance of the economy, because the capital market does not operate in isolation; whatever happens in the economy affects other sectors. Any policy introduced in the system also affects the market directly or indirectly. I will say that the market is operating in an economy that has a sluggish pattern. It is an indication that there is lack of strong economic policy that can enhance the growth of the economy and boost business activities. If you look at developed countries, the reverse is the case. For instance, when you compare the situation in Nigeria with the United States, you will see where government economic policies tends to promote employment, and many economic indicators are moving up, especially in the capital market. The major factors that will attract investors to the capital market are strong economic policies and easy way of doing business.
Last year you predicted that the capital market was going to close at double-digit, what is your prediction this year?
I foresee growth in the capital market this year, if the Central Bank of Nigeria does not change its money market rates. As you likely know, banks are giving three to two per cent on depositor, and Treasury bill is trading at one percent. As long as this trend persists, we will continue to have liquidity in the capital market. Most of the investors will rather stay in the capital market or at least collect dividends by fundamental stocks on the Nigerian Stock Exchange. Earning in dividend is much better than investing in money market instruments. If that persist, we are likely to witness growth in 2021, but not like that of 2020. What I am saying is that, we are likely to close the year positively, but the return won’t be that much.
Tell us how the stock market can attract more listing and investment amid COVID-19 challenges?
In the last two to three years, it is only few companies that got listed -MTN Nigeria Limited, Airtel Africa and few others. If we remove these companies, we won’t have any listing for the year. MTN Nigeria came to the market by the government policy and Airtel Africa decided to join on its own. Today, the Federal Government renewed Glo telecommunication, other licenses without any condition for them to visit the equities market. A lot of the oil companies are not listed. These are some of the ways government can attract more listing on NSE. The government does not have the will to do so and there is nothing much we expect from their end.
What is your impression of Nigeria’s investment landscape generally?
We have a lot of opportunities in this country, but we do not make use of them. We are blessed with mineral resources. To be sincere, we need to go back fully to agriculture, such as cocoa plantation, rubber plantation. We need to revive coal mining at Enugu and others. I think it will be better for each state government to look inward and develop mineral resources in their states. We should not continue to pay more attention to oil production. Apart from that, we need to create an enabling environment to attract foreign investments into the country. To be sincere, the way and manner we treated MTN Nigeria during listing may scare many foreign investors from coming because they do not know what may happen to them if they want to invest in Nigeria. So, I think that Nigerian government, all regulatory bodies –Nigeria Communication Commission, Central Bank of Nigeria, Federal Inland Revenue Services, Securities and Exchange Commission, among others, should do more on policy friendly initiative.
Can you mention any Federal Government policy that impacted positively on the capital market and the economy in the last one year?
What we witnessed in 2020 was more of the monetary policy rather than the fiscal policy. The fiscal policy is more of economy. Like FG said, any company that earns more than N25billion should be able to pay tax consistently. But when we talk about the Small and Medium Scale Entrepreneurs, how many of them are able to pay taxes?
The answer is almost zero because there is no effective supervision. Some of the registered companies are not paying tax and nobody is concerned to follow up on their activities. These are some of the fiscal policies that the Federal Government should work on.
Apart from that, one would expect the government to compel the Generating and Distributing Companies to list on the NSE or revoke their licenses. Now tell me, will the FG work on having Nigerian National Petroleum Corporation listed on the NSE? Never will it happen under this administration.
What are the benefits of demutualisation to the Nigerian Capital Market?
Demutualisation has enormous benefits. We are talking about 226 stockbroking firms and you are giving them nothing less than six million shares each and it will be listed at N20. If you multiply 20 by six million shares, that gives you 120 million shares. You think stockbroking firms will have 120 million and will not play in the capital market? So, demutualisation will bring about more activities, more brokers will take position. Even the current prices of listed stocks are not high.
What can you say about Federal Government’s debt servicing and borrowing?
Government will continue to borrow since it is what can trigger the economy. If you want to recover, you just have to spend money to get out of recession. If you don’t spend, you won’t recover. Spending is what triggers or accelerates economic growth and once there is economic growth, we will be better off. Today, do you know how many trillions of Naira that telecommunications brings into this economy? If railways are not working, what do you think will add to the economy? Investors are less concerned about debt services. Now the interest rate has crashed to single-digit, the government has to borrow at single digit and pay less for those services.
What would be your advice to the FG on how to tackle rising level of inflation?
As long as foreign exchange scarcity continues, we will continue to have hike in inflation. We import everything in this country. As long as there is scarcity of dollars, we will continue to have the same challenges. If the global oil prices continue to rise, the government will have enough dollars and definitely, the inflation rate will drop. Inflation in Nigeria is driven by cost-push inflation, so the government has to put strategies in place to tackle it.