How to Save Our Capital Market Investment

“Tell me nobody has seen this” were the words that entered my mind as I judiciously looked at the stock market report for the umpteenth time last Friday—as I always do every day of every year for the past seventeen years. My light bulb moment was brought on by the phenomena we see every day being overlooked, not for where they are placed, but for their significance, struck me like a bulb with a light switch. Aggregate market capitalisation, that is, all the monetary value of stocks in Nigeria, stood at a whooping 10.5 trillion naira… and nearly thirty percent of that sum was accounted for by guess who? Alhaji Aliko Dangote! While his persona as the richest black man on earth could give captivating and inspirational material to any biographer or motivational speaker, the facts made bare by that Friday, June 5 2015 ThisDay Newspaper stock market analysis and indeed the previous ones that I had overlooked, could spell economic doom for the entire  country if left without some kind of contingency plan. Alhaji Dangote is purported to own nearly 80 percent of two public liability companies (Dangote Cement Plc & Dangote Sugar Refinery Plc) with the monetary value of his stock holdings the size of Nigeria’s second, third and fourth largest companies—Nigerian Breweries,  Guaranty Trust Bank and Nestle Nigeria respectively. In other words, Dangote owns about N2.5 Trillion out of that N10.5 Trillion and this should make any investor, SEC Director-General or CBN Governor jittery about what bankers term, ‘keyman risk’ in our capital market. I mean, if one person holds nearly 24 percent of your country’s private sector, that should count as a serious risk, right? By this I am not prophesying any doomsday precipice for our capital market but just what if something were to happen to Alhaji Dangote’s investment? Has the government taken out an insurance policy on this risk and its potential impact on the entire economy? If less sensitive financial market risks have pulled more developed countries like Ireland, Spain and even Greece in tough economic times, what about ours? My take is simple: Take out a policy syndicated by both international and local insurance companies on Dangote’s holdings to protect the market from the keyman risk that he portends. And yes, the rich will get richer but the generality of capital market investment will be safer. Tell me nobody saw this!    

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This article was first published on 8th June 2015

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