Business
Running on empty: The lack of direction by the Board of the Nigerian Exchange Group
Running on empty: The lack of direction by the Board of the Nigerian Exchange Group
When on March 30, 2017, members of the then Nigerian Stock Exchange passed a resolution at an extraordinary general meeting authorising their national council to commence the process that would demutualise the Exchange, it felt like a ray of sunshine for the average mom and pop to share in this wealth creating platform called The Nigerian Stock Exchange.
The idea to demutualise had been in the works since 2001; however, was not until 2015 that the Securities and Exchange Commission issued rules on the demutualisation of exchanges in Nigeria.
The demutualisation of The Nigerian Stock Exchange was eventually completed on March 10, 2021, a process that created 432 new shareholders made up of 255 dealing members (stockbrokers) and 177 ordinary members (individuals).
A demutualised Exchange was perceived as a major powerhouse for wealth creation. This was reflected in the price of the shares as it was listed at a price N27.90 as stockbrokers confirmed that their clients were falling over themselves to become shareholders. People were extremely reluctant to sell because of the strong profit prospects. These stockbrokers confirm that on a daily basis it got to a point that there were demand for over 50 million shares with no sellers offering to sell a single share, “AND THEN THE NIGHTMARE STARTED”
In September 2021 the NGX published its 2020 Financial Account, the first published result as a demutualised exchange. The result was nothing short of a nightmare, sheer disaster.
The new demutualised Exchange recorded an operating loss of =N=93.96 million compared to a =N=12.992 billion profit recorded by its closest rival Exchange, FMDQ for the same period.
With no inclination or determination to come out and bat for their newly minted shareholders the executive management and board of the NGX had no reservation spending the =N=6.02 billion income made that year on personnel and operational costs, out of =N=6.11 billion; that was 98.52% of their income (spending over =N=3.1 billion on just 269 staff members).
To confirm the board and management’s insensitivity to a return on investment to shareholders at that 2020 annual general meeting, instead of proffering ways to address improved returns to shareholders, their major preoccupation was to argue that The company’s executive management was not being compensated enough and to demand that shareholders dig deep into the company’s shareholders funds and allot 200,419,990 ordinary shares for the operation of a long term incentive plan for executive management consisting of a deferred bonus plan (DBP).
The equivalent value of this share bonus scheme (gift) to staff, if the company had in the alternative sold those shares in the open market at the company’s listing price would be =N=5,571,675,722.00.
The board was not done yet. At that same general meeting, they also asked shareholders to approve for the payment of =N=126,000,000.00 to all non-Executive members of the erstwhile National Council of the Nigerian Stock Exchange as at 31st of December 2020.
That was the 9th of September 2021. Fast-forward to the 7th of September 2022, the Nigerian Exchange Group published its full-year account for 2021 as posted on its website and guess what? The hemorrhaging is still persisting.
Just like in 2020, the company reported Income for the year 2021 of =N=6.80 billion and expense of =N=6.52 billion. And just like they did in their 2020 AGM the board and management intend to demand that the shareholders reward the Board and Executive Management for such sorry performance.
The Board, in their published notice to shareholders, are beating their chest and saying to the shareholders that they have done excellent work and that shareholders should allow them to continue on this downward trajectory for another Year.
The Board, from the published notice to shareholders are seeking =N=35 billion of new capital, preferably in “Dollars”, without providing an articulated capital allocation plan as well as utilisation plan.
Two questions, if I were a shareholder, would love to ask at this meeting holding on the 30th of September 2022: (1) Why should I trust you with new money when all you have done is frittered what you have for your personal benefit with no recourse to me, the shareholders that invested my hard-earned money into the company (2) why has the net cash position been dropping? Rather than increasing, it dropped over the years from =N=11.5 billion in 2019 to, =N=10.3 billion in 2020, to =N=7.0 billion in 2021.
The Shareholders of The Nigerian Exchange Group need to wake up and end this nightmare; the NGX should be a bastion of everything that is desired in a listed company.
· World-class Corporate Governance
· Current Chairman and Chief Executive have been at the helm for close to 11 years
· Competitive Return on Investment and Return on Equity
· Company has done two years post demutualisation without paying a single kobo dividend
· Best in class Expense Management programme (cost to Income earned)
· FMDQ cost/income of 46% for 2021
· NGX cost / income of 96% for 2021
The current market price of shares of NGX of =N=19.80 as against the listing price of =N=27.90 is a statement and reflection of investors negative perception, not just on the NGX Group and the people running it, but a declaration of non-confidence on the people running and overseeing the actual Exchange. Even the chairman alludes to this in the Chairman’s statement in the just-published annual account “the Group is trading at about 17x compared to the global peer average of 20x, which suggests that its shares are undervalued relative to other Exchanges globally.
*Renewed Hope Agenda and Impacts in Aviation*
By Mary Odoma
President Bola Tinubu’s knack for selecting top talent is unparalleled. In his quest to build a prosperous Nigeria, he’s assembled an exceptional team. By leveraging their expertise, experience, and strategic insight, he’s fostering national stability, economic growth, and a sustainable future.
His latest win is in Aviation and Aerospace Development, where he’s appointed a fearless and straightforward leader, Festus Keyamo, SAN. Keyamo’s commitment to excellence makes him an ideal fit. President Tinubu’s vision for Nigeria is taking shape, and his leadership choices are truly commendable.
A dedicated, charismatic and impactful lawyer, the dynamic and astute developer is a terror to mischief makers and enemies of progress. A tough and forceful personality who is determined with an ultimate goal to change Nigeria.
Appointed on 21st August 2023 as the helmsman of the Ministry, Keyamo has been unwavering in his drive for positive transformation, reforming the sector and bringing about enduring positive impact in a transparent manner.
His Ministry has the core mandate of regulating air travel and aviation services in the country. It is also responsible for overseeing air transportation, air development, maintenance, provision of aviation infrastructural services and other needs.
A very patriotic Nigerian, Chief Festus has several achievements, in line with the Renewed Hope Aviation Roadmap approved by President Tinubu to his credit.
In a steadfast commitment towards revitalizing the nation’s aviation sector, Mr Keyamo was able to ensure the approval of the concession of the Nnamdi Azikiwe International Airport (NAIA), Abuja and Mallam Aminu Kano International Airport (MAKIA), Kano Airports. This is in line with the initiation of the Nigerian Airport Concession Strategy.
Also, in line with the Federal Ministry of Aviation Roadmap, Chief Keyamo initiated the signing of an MoU with the Nile University for the take-off of African Aviation and Aerospace University (AU). This milestone achievement of the Minister aims to integrate and create an avenue for the training, research and development of ready middle-class manpower for the sector.
Equally, under his watch, the pragmatic leader led the Ministry into partnership with the ICRC and also a collaboration with the IFC on infrastructural development. This partnership is to both develop and implement a comprehensive and durable framework that will meet the infrastructural needs of the sector over a long period.
Through Keyamo’s congruence and dynamism, the BASA arrangement is another revolutionary innovation aimed at ensuring the operationalization of direct flights between Nigeria and Brazil.
Keyamo’s motivation and altruistic devotion to having a functional aviation and aerospace sector also moved him to upgrade the Muhammadu Buhari, Airport, Maiduguri to the standard of an international airport. This airport is ready to commence full operation on January 1, 2025
In the area of staff motivation, retirees of the Ministry now have no cause for alarm as their interest is covered. Recently, the Ministry honoured 24 retirees drawn from the lowest rung to the highest. It is in a bid to acknowledge those who have contributed immensely to the growth and development of the sector as Nation-builders.
His prompt response to issues including distress reveals an empathetic personality and someone who is very much alive to his responsibilities. Recently, while reacting to the accident involving a helicopter on the 24th October 2024, Mr Keyamo, immediately upon receiving the distress call, activated protocols aimed at search and rescue operations, mandating all relevant bodies to do everything humanly possible to ensure the safety of the passengers on board the ill-fated vehicle.
The Minister was also actively involved with all the relevant agencies towards ensuring a coordinated response. His active and physical involvement led to the minimization of casualties.
In a show of collaboration and solidarity, the Hon. Minister travelled to far away Marrakesh, Morrocco, to give support to the 2024 International Transport Workers’ Federation (ITF) congress. His presence was to underpin the importance the federal government attaches to the role of the transport workers in stabilizing the aviation sector.
Festus Keyamo as the Honourable Minister of Aviation and Aerospace Development is certainly the best thing that has happened to the industry. He has exhibited passion, dedication and selfless forthrightness in the discharge of his duties and a total comprehension of what it takes to carry out his roles. He is well-groomed for the job and his background has helped him greatly towards shaping the positive impact he is making on society.
Today, Festus has proved that a faithful, disciplined, and dedicated Nigerian can stand out of the crowd because he symbolizes what governance is all about. These feats can only be achieved by a man with the right comportment and conduct in the service of humanity and the fatherland.
Deserving of note is that Chief Keyamo, through the foresight of President Tinubu has well-prepared team leaders appointed as heads of the agencies of the Ministry.
The supportive and collaborative roles of the Nigeria College of Aviation Technology, Nigeria Metrological Agency, Nigeria Civil Aviation Authority, Nigeria Airspace Management, the Federal Airports Authority of Nigeria, and the Nigeria Safety Investigation Bureau (NSIB), have brought about those tangible and noticeable volte-face experienced today in the Aviation sector.
With Keyamo at the helm, Nigeria’s aviation sector is experiencing a transformative shift, thanks to President Tinubu’s foresight in appointing well-prepared team leaders. The Nigeria College of Aviation Technology, Nigeria Metrological Agency, and others are working together to bring about tangible change. Keyamo’s dedication, discipline, and commitment to service have improved Nigeria’s image and reformed the aviation and aerospace sectors.
Odoma is the President of New Nigeria Network [NNN[ writing from Abuja.
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