Universities as veritable channels of capital market literacy

Capital market literacy can be viewed as the level of education and awareness about capital market activities which is crucial for the development of any country’s capital market. Currently, a major concern of the apex capital market regulator in Nigeria -the Securities and Exchange Commission (SEC) – is how to attract more retail (individual) investors into the capital market with a view to deepening the market. As disclosed by the Director General of SEC recently, retail investors’ participation in the capital market is less than 2 per cent compared to 9 per cent in Malaysia, 13 per cent in UK, 19 per cent in South Africa and 43 per cent in USA.

Indeed, the importance of attracting more retail investors cannot be over-emphasized. This is because there is evidence to suggest that the performance of the Nigerian capital market is largely influenced by foreign portfolio investors who invest huge funds in search of high returns and are quick to retreat at the slightest shock. The temporary nature of foreign portfolio investments, with its associated volatility, is neither in the interest of the capital market nor the Nigerian economy in general. In 2015 for instance, the market lost over 17 per cent of its value largely on account of the exit of foreign portfolio investors in the wake of persistent fall in oil price and capital controls introduced by the Central Bank of Nigeria.

Without doubt, this relative low level of retail investor participation has a lot to do with the plunge in investor confidence occasioned by the near capital market collapse of 2008-2009. It is also a function of the low capital market literacy level across the country. Regarding the first challenge, the SEC has undertaken a number of initiatives in recent times to shore up investors’ confidence. These include the establishment of the National Investors Protection Fund meant to cushion the adverse effect of losses suffered in the capital market; the e-dividend policy designed to minimize cases of unclaimed dividend; the Direct Cash Settlement scheme which ensures that investors receive their money directly whenever securities are sold and the Corporate Governance scorecard for companies listed on the Nigerian Stock Exchange (NSE). Also commendable is the recapitalization of capital market operators which would go a long way in curbing sharp practices in the market and boosting investors’ confidence.

In addition to low investor confidence is the low level of capital market awareness across the country. In fact, a recent survey by Ernst & Young (EY), a global professional services firm, put the capital market literacy level at a mere 16 per cent. The Nigerian capital market 10-year master plan (2015 -2025) attributes this in part to the limited channels available for education of the public about capital market operations. As part of efforts to boost capital market literacy, SEC has been organizing quiz and essay competitions for secondary school students as well as conducting capacity building programmes for financial journalists, judges and shareholders’ associations. There are also a number of capital market literacy activities being carried out by other stakeholders in the Nigerian capital market like the NSE and the various trade groups.

Be that as it may, the need for increased tempo in capital market literacy activities has never been greater as the financial marketplace continues to evolve. Greater understanding of key capital market issues is required on the part of retail investors to evaluate the choices available to them – one of which is participation through collective investment schemes. This is where universities come in. As torchbearers in tertiary education in Nigeria, universities are best suited as channels of capital market education given their huge literate population. There are 140 universities currently listed on the National Universities Commission (NUC) website, comprising 40 federal, 40 state and 60 private universities. According to the 2014 Needs Assessment of Nigerian Education Sector, the total student enrolment in all Nigerian universities grew from a little over 2000 in 1962 to more than 1.4 million in 2014.

Considering the fact that first year entry requirement into most universities is a minimum of five ordinary-level credits obtained in not more than two sittings at the Senior School Certificate of Education (SSCE) examination or equivalent in addition to a minimum cut-off mark of 180 out of a maximum of 400 marks in Joint Admission and Matriculation Board (JAMB) entrance examination, it is safe to assume that the target population for capital market instruction in the university is better equipped to receive it than many other target groups. If well implemented in the university system, the following recommendations will go a long way in boosting the level of capital market literacy in Nigeria and hence increase significantly retail investor participation in the near future. The Securities and Exchange Commission (SEC) should:

§  Collaborate with universities to introduce capital market studies into the curricula for universities to be offered as part of the General Studies (GST) courses by all newly admitted students.

§  Facilitate the introduction of capital market studies as a degree programme in the university up to the post graduate level.

§  Encourage the formation of capital market clubs to promote capital market awareness within the universities and their host communities.

§  Institute annual awards for best Master and Doctorate research/thesis in capital market studies for post graduate students in Finance, Economics, Accounting, Business Administration and Law.

§  Endow professorial chair in capital market studies in three first-generation federal universities say, Ahmadu Bello University Zaria, University of Lagos and University of Nigeria Nsukka. Each university will be expected to address a focal area in capital markets research.

§  Organize workshops and train-the-trainers programmes for lecturers teaching capital market studies to address shortage and competency gaps.

In view of the scale of efforts involved, the National Universities Commission (NUC) should be courted to champion the inclusion of capital market material in the curriculum of all Nigerian universities by making it part of its Benchmark Minimum Academic Standards (BMAS). The SEC should be the facilitator with support for course content development provided by the Nigerian Capital Market Institute (NCMI). Lecturers in the relevant disciplines should be encouraged to start and complete professional programmes run by trade groups in the capital market such as the Chartered Institute of Stockbrokers and the Institute of Capital market Registrars. The availability of TETFUND sponsorship will serve as impetus for speedy completion of these programmes. In pursuit of all these, the buy-in of the Association of Vice Chancellors of Nigerian Universities (AVCNU) is critical.

In conclusion, the Nigerian capital market 10-year master plan envisages doubling the literacy level by the year 2025. Universities, as production centres of high-level manpower, can serve as veritable channels of achieving this target.

 

 UWALEKE JOSEPH UCHENNA