Stock market participation in Africa remains extremely low. A report published in Nigeria by Nairametrics some months ago indicated that there were about 5 (five) million Central Securities Clearing Systems (CSCS) accounts, of which only about 100,000 were active. That means that less than 2% of Nigerians have CSCS accounts at all, and only 0.05% of the population were active on the Nigerian Stock market. Of course the picture is similar across most African countries.
The Stock market is where securities or stocks of Publicly listed Companies are traded every working day. In Nigeria, to participate in trading such stocks, the company has to be publicly listed on the Stock exchange and compliant with applicable regulations, participants have to register with a Stockbroker who will help them open CSCS accounts and assign a Clearing House Number (CHN) to them to have access to the Stock exchange trading floor. These days the registration process is very easy and could be done within 48 hours or less. Required investment can be as low as ₦5,000. It is therefore alarming to see such low participation in the stock market in Nigeria and in Africa, yet a lot of people want to be rich. It is even 10 times easier to convince people to get into ponzi schemes and betting than to get them to participate in this wealth generating and transfer machine called the Stock market.
When we talk to a lot of the Baby boomers and Gen X in Nigeria about Stock investment, they would tell you how their fingers got burnt in the Nigerian stock market in the 2008 crash, and how they vowed never to have anything to do with it since then. For Millennials and Gen Z they remember the devasting blow that the previous generations were dealt during the 2008 crash, or might complain about it being too slow for their preference, or how it is not their thing. Whatever your excuse is, it is legitimate. However, that has not stopped the stock market from growing tremendously over the years, with some stocks delivering well over 1,000% gain in capital appreciation in a few years.
In one of our previous articles we gave the following examples: "some companies that paid dividends for 2024 financial year include GTCO ₦8.03, Zenith Bank ₦5, Dangote Cement ₦30, etc., and they all publish their Financial results quarterly (This is not any form of investment advice). Imagine owning 1 million shares of GTCO 20 years from now, and how much dividend one would be receiving annually. Another example of capital appreciation of some Nigerian stocks in the past 52 weeks include Presco ₦346 to ₦1,186 as at today, Vitafoam ₦17.5 to ₦69 as at today, Nigerian Breweries ₦25.25 to ₦58 as at today, to name a few (again this is not any form of investment advice)". We have literally seen some stocks move from less than ₦1 to over ₦20, and some stocks at less than ₦30 currently trading above ₦1,200 in a few years. Of course there are also a number of stocks that have performed badly within the same period.
Anyway, we've got your back. That is one reason Cowryvest was born, to simplify and demystify the process of investing and have you get on board as quickly as possible so that we can all make some good money.
There has been a lot of improvement in regulations and operations on the Nigerian stock market, which have largely curbed the excesses that resulted in the 2007/8 crash. You don't need to take our words for it, you can research independently to confirm this. The Securities and Exchange Commission and the Nigerian Stock Exchange have made a lot of improvements, and the Central Bank of Nigeria has done the same too for the banks. Technology has also contributed to improving transparency a whole lot. An example is that once you register with a Stockbroker with online access (which we always advise), you would have access to a portal where you can trade stocks by yourself, and monitor your own portfolio, unlike in the past where you had to send buy and sell orders via email or other means which were opaque. The CSCS also has a provision for you to view your CSCS accounts directly via their portal (paid access though not much). So you do not have any need to be scared of Stock investment in Nigeria anymore.
Our advice to you would be "Get in the game, do not be a spectator". One easy technique by which you can start is to Start small and use Naira Cost Averaging on a weekly or monthly basis to increase your investment. Just like the African proverb that says, "You do not measure the depth of a river with both feet". You can start by registering with a Stockbroker, and start with an amount that you can spare to test the waters, then add to your investment weekly or monthly. For instance you can start with ₦10,000 monthly, then as you get more comfortable with the system you can increase it. That way you would tackle your fears and be in the game rather than be a spectator. We will emphasize this systemized format of investing in another article. We will also discuss diversification in another article especially to address the Gen Zs who might think that Stock investment is not their thing. Stay tuned!
Happy Investing! Feel free to share this article.
DISCLAIMER: All contents on this website are for informational purposes only and should not be taken as any form of investment advice. Do your own research and contact your financial advisor before making any investment decision. All contents may not be reproduced, distributed, or used without prior written permission.
Comments
Post a Comment