ABSTRACT
The purpose of this research work is to
appraise the role of Capital Market in the privatization of Public
Enterprises in Nigeria with the Nigerian Stock Exchange, Lagos as a case
study. The following three null hypotheses were formulated through the
use of Secondary Data.
However for the analysis of data simple regression analysis was made use of and the result obtained revealed that:
The activities of the Nigerian Stock
Exchange have significant relationship to the privatization of public
Enterprises. The Nigerian Stock Exchange Markets have significant In
Economic development and growth.
The development of Manufacturing Sector was related to the operation of the Nigerian Stock Exchange.
This study had given some suggestion,
recommendation based on the findings and which if adhered to are capable
of strengthening and improving the role of the Capital Market in the
Privatization of Public Enterprises in Nigeria.
TABLE OF CONTENTS
Title page
Certification
Dedication
Acknowledgement
Abstract
Table of con tents
CHAPTER ONE
1.0 Introduction
1.2 Statement of the research problems
1.3 Aims and objectives of the study
1.4 Research question
1.5 Statement of research hypothesis
1.6 Research Methodology
1.7 Significant of hypothesis
1.8 Scopes and limitation of the study
1.9 Definition of terms and concept
1.10 Plan of the study
CHAPTER TWO
Literature review
2.1 Introduction
2.2 Definitions and concepts of privatization
2.3 Historical development and growth of the capital market
in Nigeria
2.4 The Nigerian Stock Exchange
2.5 Major operation in the Nigerian Stock Exchange
2.6 Role of the Capital Market in the Privatization of Public
Enterprises
2.7 Steps taken by the Nigerian Stock Exchange in marketing of shares of enterprises for designated Privation
CHAPTER THREE
Structural Framework
3.1 Introduction
3.2 Dealing Procedure on Nigerian Stock Exchange
3.3 Stock Exchange and Privatization
3.4 Benefits of the privatization Programme
3.5 Effects of the Privatization Exercise on the Capital Market
CHAPTER FOUR
Research Methodology and Interpretation of Result
4.1 Introduction
4.2 Data for Regression
4.3 Analysis of Results
4.4 Interpretation of Results
4.5 Summary of Findings And Policy Implications
CHAPTER FIVE
Summary, Conclusion and Recommendation
5.1 Summary
5.2 Conclusion
5.3 Recommendation
Bibliography
Appendix
CHAPTER ONE
1.1 INTRODUCTION
It is a known fact that the investment that promotes economic growth
and development requires long term funding, far longer than the duration
for which most investors are willing to commit their funds.
Capital market is a collection of financial institutions set- up for
the granting of medium and long term loans. It is a Market for
government securities, for corporate bonds, for the mobilization and
utilization of long term funds for development that is the long termed
of the financial system. In this market, Leaders (Investors) provide
Long term funds in exchange for long term financial assets offered by
borrowers. This market embraces both the new issues (primary) market and
secondary market. Such securities might be raised in an organized
market such as the Stock Exchange. In this sense, it involves consortium
under writing, syndicated loans and project financing.
Thus, it is a mechanism whereby Economic unit desirous to invest
their surplus funds, interact directly or through financial
intermediaries with those who which to procure funds for their
Businesses. In Nigerian context, participant includes Nigerian Stock
Exchange, Discount Houses, Development banks, Investment banks, Building
Societies, Stock Broking Firms, Insurance and Pension organizations,
the government, individuals and the Nigerian Stock Exchange Commission
(NSEC)
Though the role of the Capital market in
the Privatization of public enterprises has for long been of interest
to present time researcher as well as Economics planners .This is so,
because, the Capital being as it is plays a vital role in the successful
completion of the Privatization programme. Thus, the broad role of the
Nigerian Capital market in Privatization will be to serve as platform
for the participation of the extremely large numbers of small investors
throughout the Country in the distribution of shares of enterprises that
will be designated for privatization.
Among such benefit highlighted by the
Bureau of Public Enterprises (2000) are that Privatization will bring
about, a reduction in Government wasteful spending in the area of
running the enterprises, also that strategic Investors/Foreigners will
bring their money and new technology into Nigeria to run the Company
eventually leading to growth and development of the Nigerian Economy .
The Nigeria Stock Exchange has its
branches in Lagos. (1960), Kaduna (1978), Port - Harcourt (1980), Kano
(1989), Onitsha Feb. 1990- August 1990; Abuja Area Office, 1990; and
Yola (2002); The Lagos Stock Exchange (1960) was transformed on 2nd December 1977 into, the Nigerian Stock Exchange.
Finally, it is therefore the role of the
Nigerian Stock Exchange to see to the marketing of these 20% equity
shares to the Nigerian Public and to ensure that they are evenly spread
among classes and regions of Nigeria acquiring the 20% shares under a
conceived communication policies.
1.2 STATEMENT OF THE RESEARCH PROBLEMS
The major concern of this research work
is to critically appraise the role of capital market (through the
Nigerian Stock Exchange, Lagos) in the Privatization of public
enterprises. The research work will also examine and provide answers m
respect of the following questions;
- which activities of the Nigerian Stock Exchange is in relation to the Privatization of Public Enterprises?
- To what extent has the Nigerian Stock Exchange contribute to Economic development and growth?
- To what extent has the government development stock rate influenced the rate of stock market capitalization.
1.3 AIM AND OBJECTIVES OF THE STUDY
The objectives of the study will be summarized below;
i) Critically appraise the role of Nigerian Stock Exchange in relation to the privatization of public enterprises.
ii) Determine the extent to which the Nigeria Stock Exchange contributes to Economic development and growth.
iii) Find out the extent to which
the development of capitalization will be related to the operation of
the Nigerian Stock Exchange.
1.4 STATEMENT OF HYPOTHESIS
- Ø What role does Nigerian Stock Exchange play in the privatization of public enterprises?
- Ø Does Nigeria Stock Exchange contribute to Economic growth and development?
- Ø What is the relationship between development of capitalization and the operation of the Nigerian Stock Exchange?
1.5 STATEMENT OF RESEARCH HYPOTHESIS
In the course of this study, three main hypotheses are formulated •
Hypothesis 1:
Ho: That the activities of Nigerian
Stock Exchange have no any significant relationship to the privatization
of public enterprises.
Ha: That the activities of Nigerian Stock Exchange have significant relationship to the privatization of public enterprises .
Hypothesis 2:
Ho: That the Nigerian Stock Exchange market does not have any significant effect on Economic development and growth.
Ha: That the Nigerian Stock Exchange market has significant effect in Economic development and growth .
Hypothesis 3:
Ho: That the development of manufacturing sector does not relate
to the operation of the Nigerian Stock Exchange.
Ha: That the development of manufacturing sector relate to the operation of the Nigerian Stock Exchange.
1.6 RESEARCH METHODOLOGY
1.6.1 The
Econometric Analysis will be used to test for the relationship between
dependent and independent variables. Data collected from secondary
sources and also compiled from publications such as CBN and Statistical
bulletin.
1.6.2
Regression Analysis is utilized to measure the impact of Market
Capitalization, Share index, Amount Generated from Privatization of
Public Enterprises, Eligible Development Stock on Gross Domestic Product
in the Nigerian economy from 1981 - 2008. GDP is
dependent variable while Market Capitalization, Share index, Amount
Generated from Privatization of Public Enterprises, Eligible Development
Stock are independent variable.
1.6.3 MODEL SPECIFICATION
Gross Domestic Product is the dependent
variable, while the independentvariable is Market Capitalization, Share
index, Amount Generated from Privatization of Public Enterprises,
Eligible Development Stock.
The model expressed as an implicit function will be:
Model 1
From Privatization of Public Enterprises (privpub)
That is share index = f (pripub)
Shareindex = (?0 + (?1 pripub + µ
The model expressed in estimation form will be:
BDP = (?o + ?1X1 + µ)
Where
|
?o
|
=
|
Autonomous (Intercept)
|
|
?1
|
=
|
Coefficient of direct investment (X1)
|
|
µ
|
=
|
Stochastic or error term
|
Model 2
Amount Generated From Privatization of Public Enterprises
(privpub) and Gross Domestic Product
That is gdp = f (privpub)
|
|
|
gdp = ?o + ?1 pripub + µ
|
|
?o
|
=
|
Autonomous (Intercept)
|
|
?1
|
=
|
Coefficient of direct investment (X1)
|
|
µ
|
=
|
Stochastic or error term
|
Model 3
Market Capitalization (mktcap) and Gross Domestic Product
That is gdp = f (mktcap)
gdp = ?o + ?1 mktcap + µ
Where
?o = Autonomous (Intercept)
?1 = Coefficient of direct investment (X1)
µ = Stochastic or error term
The research methodology is to use
secondary data and this will lead to regression analysis to test for the
relationship between dependent and independent variables.
1.7 SIGNIFICANCE OF THE STUDY
This thesis will be useful to Economics
and various classes of financial users in various Disciplines. Also this
research work will be of great importance to the Nigerian Public,
policy maker and to the less developed Countries (LDC) above all, the
study as a reference to prospective students who might want to study
issues about capital market in Nigeria and will also be useful for
developed Countries and international organization if it is look into
carefully.
1.8 SCOPE AND LIMITATION OF THE STUDY
There are various institutions under the
capital market, but this study limits itself on the Nigerian Stock
Exchange in Lagos. This is so because the Nigerian Stock Exchange Lagos
provides, the researcher with the necessary information and materials
needed to carry out the study and also because of time availability and
financial constraints.
However, the limitation will not affect the validity of the generalizations and conclusions this research work.
1.9 DEFINITION OF TERMS AND CONCEPT
In the process of the research work some
word will be used and acronyms which might be new to those that might
benefit from this work in line with the researcher have defined these
words and acronyms as used in one paragraph to the other.
Capital: Any used for long-term investment or money used to start a business
Capital market: Is collection of financial institutions set-up for the granting of medium and long-term Loans.
Equity or equities:
According to Oxford dictionary of Economics, equity is the ordinary
shares or common stock of companies. The owners of these shares are
entitled to the residual profits of companies after all claims of
creditors.
Securities: Securities are written or printed documents by which the claims of holders in specified property are secured.
Investors: Is a person or an institution that uses his savings or borrowings to buy securities.
Public Enterprises:
According to Akinwade (1992) define public enterprises as the
organization, financed and owned by the Federal Government of a Country
for the public interest.
Role: Chamber (1999) puts role as a function or part played by someone or something in life, business e.t.c
Shares: Haisan J.L [1977] defined shares as the capital of a limited company divided into smaller units.
Stocks: Joyce M.H [1993] defined stock as the capital of a business company divided into shares
Ad- hoc: Latin
word, happening that occur when necessary but not plan for that is in
advanced. Jobbers or market makers: are contrasted with brokers, who
operate in the same market, but put people who want to buy and sell in
touch with each other, and do not trade for themselves.
1.10 PLAN OF THE STUDY.
For proper presentation the study this study is divided into five chapters.
Chapter one deals with
the background of the study, statement of the problems, aim and
objectives of the study, statement of hypotheses, research methodology,
significance of the study, scope and limitation of the study, review of
relevant literature, definition of terms and concept.
Chapter two is on the relevant Literature review of the study.
Chapter three contains the structural composition of the study.
Chapter four contains the presentation and data analysis.
Finally, the fifth chapter deals with the summary, conclusion, recommendations and area for further study.