What Does Dangote’s Presidency Portend for the NSE?

Dangote’s journey to the presidency of the Stock exchange commenced in February 2008, with his election into the Council as chairman of the Kaduna/Kano and Yola Zonal Council. Being 1st vice president made him a natural successor to Oba Otudeko. But certain issues came up, making his assenssion a daunting task. However, he overcome the challenges and became the president of the NSE. Kenneth O Eze looks at what his presidency portends for the stock exchange.

Aliko Dangote’s road to the presidency of the Nigeria Stock Exchange (NSE) looked stormy. At some point, it looked like an unrealisable ambition for the business mogul, but he made history on August 6, 2009, at the 48th annual general meeting (AGM) of the Exchange.
The market has been ravaged by the global economic downturn. As if that was not enough, his fellow Forbes’ list billionaire, Femi Otedola, masquerading under AP, cried wolf, fingering Dangote for share price manipulation.
Suffice it to state that the turbulence being witnessed in the equity market has left many impoverished. Then the people looked away from the global meltdown to point at “leadership meltdown in their market,” as one of the reasons for the wildfire devastating their wealth.
Dangote’s emergence as the 17th President of the NSE came in characteristic manner. It demonstrated the unalloyed solidarity of the capital market community. The intrigues leading to the AGM at which he was crowned saw the Otedola camp orchestrating media hype, prosecuting the war on the double fronts of the conventional courts and that of public opinion. If they won any, both proved worthless, as Dangote in calm and resolute manner has mounted the saddle.
A section of shareholders sought judicial intervention to stop the election without success. This was despite Prof Ndi Okereke-Onyiuke’s recent stance that the council is law abiding, and pays full respect to judicial pronouncements. She was quoted last week as positing that “the council of the exchange has always been guided by the prevailing legislations.”
History has it that Dangote is only the second President of the NSE to emerge without the rigours of voting by members. He did his groundwork so well that no other council member signified intention to run against him!
The Director-General of the NSE happily presented the new president to the media, noting that Dangote’s emergence as president followed a unanimous vote. This is the second time an NSE president is being unanimously elected. The first was Late Sir Louis Odumegwu Ojukwu (KBE), the first president of the NSE.
As if in allusion to the intense lobbying and politicking that preceded the emergence of Dangote, Oba Otudeko, immediate past president of the NSE counselled: “The capital market is indeed our heritage and we must be conscious that actors come and go, but institutions, in this case the market, … tower above all of us.”
Actors indeed have come and gone. And as is natural, many more would still take to the stage. Musa Al-Farki has gone out of the Securities and Exchange Commission (SEC), and Okereke-Onyiuke would soon retire, just like Dangote and Otedola are reported to have drawn the curtain on their acrimonious relationship, but the impact of their actions on the capital market is likely to abide long.
Dangote seems to have quickly addressed this in his statement to the media, shortly after emerging president. He observed that “95 per cent of the quoted companies are making a lot of money, unlike the case of other developed markets. All we need to do is create liquidity and ensure that confidence returns to the market. The market belongs to all; as such, I beg you to give all the support needed.”
A recurring issue in refloating the market has been that of rekindling public confidence. Analysts posit that a rekindling of confidence must of necessity stem from transparent leadership at the capital market. The humility displayed by Dangote and Otedola in making-up soon after the emergence of the former as president has the ability of building confidence, removing the sharp divide that their disagreement occasioned in the market, according to analysts that spoke to M2.
His eagerness to ensure a market rebound is also expressed in his willingness to support the management of the Exchange and in the agenda of reform he rolled out at presentation as president.
According to him, building “Transparency and improved corporate governance of the market; improving the liquidity, turnover and size of the market; enhancing market efficiency and updated rules, process and procedures; provision of world-class infrastructure and technology for workers; and massive capacity building which include rapid skill enhancement of the staff by the stock exchange and investors’ education” will be his mission.
With this five point agenda, it can safely be said that a revolution is to be expected in the market. This way, he would have justified the confidence reposed in him by being crowned president without opposition, despite the court of public opinion weighing heavily to the contrary.
M2’s finding at both the Exchange and the Commission affirm that the president is held in high esteem. They say that Dangote meets the standards of the president which include clout and personal business success. The market, they maintain, needs the president’s clout to turn political decisions in favour of the market and his charisma to attract followership and loyalty in the market. Expectations are high at the Exchange and Commission that his leadership would aid market recovery.
The president’s pledge, coupled with the capital market’s body and soul character, now being expected to be backed by action is looking geared towards positive impacts. So long as the key actors galvanize for the five point agenda, success is assured.
However, there are issues being raised as the action brought by the Independent Shareholders Association of Nigeria (ISAN) before the court to stall his election due to his alleged involvement in the manipulation of AP’s share prices is still pending. Observers note that the council defied the court’s order to hold the election. M2’s investigations reveal that the court adjourned the matter to September 28, 2009.
It is also left to be seen what impact the renaissance being carried out by the Central Bank of Nigeria (CBN) under Mal Sanusi L Sanusi would have on the capital market. Most of the banks operating in Nigeria are listed on the Exchange, including the five that are under heat at the moment. Shareholders and the Nigerian Bar Association (NBA) are already crying foul, but light is yet to beam fully on the fruits this action would bear.
Hopes are that the resolve of the capital market would not cave in, as key actors come under scrutiny. Okereke-Onyuike has been compelled to clarify Transcorp’s exposure totalling over N30 billion, for which she is being fingered, being the Chairman of Transcorp’s board of directors. On this, she was quoted last week as positing that: “In view of the action of the CBN, the board will be meeting on August 27, 2009 with the lending banks to consider repayment options.”
Last week too, SEC instructed the NSE to remove Erastus Akingbolu, the deposed managing director of Intercontinental Bank from the council of the Exchange. Akingbola is the second vice president, elected, according to Okereke-Onyuike, in his personal capacity.
She informed the media, while unveiling Dangote as president, that the Council also elected Reginald Abbey-Hart and Erastus Akingbola as 1st Vice-President and 2nd Vice-President respectively.
The vice president’s election came without complaint from any quarter in the internal constituency. Abbey-Hart was before his election, chairman, Port Harcourt/Onitsha Zonal Council, comprising Rivers, Bayelsa, Anambra, Enugu and Benue States, while Akingbola was chairman, Lagos/Ibadan Zonal Council, covering Oyo, Osun, Ogun, Kwara, Kogi and Ekiti States.
These developments, analysts posit could weigh heavily on Dangote’s five point agenda, albeit temporarily.
Ben Atonko, writing in Sunday Trust of August 9, 2009, asked ‘what can Dangote do for the NSE?’ He posited that stakeholders expect their 17th president to engender “a re-orientation in trading procedures. They want the market to be more transparent and efficient.”
He continued: an “articulation and execution of reforms needed that would reposition the Exchange” is  among expectations of stakeholders from Dangote. Popular thinking is that with these achieved, Dangote would have made a success of his presidency at the NSE.
This done, the standpoint of Otudeko, while handing over to Dangote would have been realised. He solemnly called on all stakeholders to join forces, to build a more vibrant Exchange. His opinion is that there is everything to gain by all parties teaming-up to save the market.
Otudeko’s words: “Let us protect our Exchange, remain faithful to our mission and speak positively to enhance confidence in our market and be able to sustain its growth. We have finally settled to resolve all issues in the best and enduring interest of a stable Nigerian Capital Market.”
However, following the standoff between the CBN and Akingbola, SEC formally instructed the NSE to remove the second vice president from the council of the Exchange. SEC in a letter dated August 19, 2009, signed by Daisy Ekineh, the acting director-general, directed immediate suspension of Akingbola, the second vice president of the Exchange from the council, “following his removal as group CE of Intercontinental Bank.”
Okereke-Onyiuke responding to the Exchange’s claims not to have powers to suspend Akingbola unilaterally, as such would run foul of the law, cited the internal statutes of the Exchange to support her position, while also drawing the regulator’s attention to pending adjudication on the saga.
Her words: “It would appear that suspending him now from council on grounds of an action which is being contested in court would be contrary to the Rule of Law which this Administration has so often emphasised.”
Her further explanation is: “I have also been advised by our legal consultants that because the matter is subjudice, the issue should be treated with caution to avoid putting the exchange in a legal debacle.”
The current stance of the CBN and the Economic and Financial Crimes Commission (EFCC) that has seen Farida Waziri, Chairman of EFCC, relocate to Lagos on a debt recovery drive on CBN’s prompting, would further devastate the capital market community, drying up the funds necessary to implement the liquidity point on the new president’s agenda.
M2 sources at SEC maintain that international analysts posit that the market has bottomed-out and would be recovering in either, “V, U or W format.” The source explained “V” to mean straightforward recovery, while “U” refers to being flat for sometime before an upward journey. “W” means that the market could do a zigzag route to recovery.
On the aggregate, expectations are high that the market would shortly recover under the new leadership, given that a new director general is expected at the Commission. The same scenario would also play out at the Exchange with Okereke-Onyiuke due to retire soon. These reinforce stakeholders’ optimism that the Dangote’s clout and charisma would help buoy-up the market.