Nigeria: Economy, Finance and the Role of the Stockbroker

The first part deals with the financial background to the economy. The switch from an agricultural economy to one where, since 1974, oil has taken centre stage, has been dramatic. A country traumatised by civil war has left deep scars, as a result the oil boom of the 1970’s was not taken full advantage of—wastage and misallocation of revenues were characteristic of the 1970’s and 80’s. Despite this, there has been some improvement in the infrastructure as a result of public spending.The second part looks at the role of the stockbroker. As professional advisors, stockbrokers are expected to have a good understanding of the financial market. Sadly the advice that some gave to private investors was not always sound. A particular example was when a third of the sample advised their clients to borrow money for share purchase at a time when interest rates were particularly high.It is interesting to note that in spite of their strong support for deregulation of the stock market, the majority (74.1%) expressed satisfaction with the Nigerian Securities and Exchange Commission (NSEC).The authors expected the financial press to be the most important source of financial information, instead company reports took first place, possibly reflecting a lack of confidence in press reporting.62% of the stockbrokers were ignorant of the fact that a company may declare profit even when its cashflow position is in deficit, and 22% had the misconception that listed companies were always profitable.Unlike the UK and the USA there is yet to emerge a market risk service, hence the stockbrokers have to rely on their own perceptions of market risk, and the results show that