by Lekan Olanrewaju
Whilst allegations and counter-allegations are traded over the House of Reps probe into the capital market crisis, another party, in the person of former Central Bank of Nigeria Governor, Charles Soludo, has come out to deliver something of a prophecy of doom. Appearing before the House of Reps committee investigating the near-collapse of the capital market, he warned that the market would always suffer crashes, unless changes were made.
“Someone is complaining of the rain that beat him yesterday, but look at the sky and another is threatening to start.” he said. “Except this committee is ready to switch from an Ad-Hoc committee to a permanent one, the stock market will always crash. Stock market crashes will always happen. There is no amount of reforms or regulations that will stop future ones from happening,” he said. “There will never be an end to regulation. No amount of regulation will ever be perfect.”
He also pointed out that during his tenure, he spearheaded the N25 billion capitalization base initiative for banks which according to him, transformed the sector, enabling 14 of the emerging banks enter the top 1000 banks in the world, as opposed to before when none were in the top 1000.
“The race for size by the banks also spurred second and even third round capital raising by some banks, and investors smiling to their banks.” he said. “New millionaires emerged, and a thriving briefcase carrying middle class began to emerge; new cars adorned the streets.”
“We basically engineered the new market we talk about.” he continued. “Without consolidation, there would have been no market collapse to talk about. As thousands made tonnes of money, thousands also poured in. Some even sold their assets to join in the speculative frenzy in the irrational expectation that what goes up remains up; everyone wanted to become a Stockbroker or dealer in the market.”