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CHAPTER ONE

1.0 INTRODUCTION

A GENERAL DESCRIPTION OF THE AREA OF STUDY

The growth of the capital market and the development of an

economy move in the same direction and they appear to be

inseparable.

Most market economic Endeavour to put in place stable

and active capital market. The existence of such market services

(inter) allows us a link between the surplus and deficit unit of the

economics.

Since mobilization and allocation of savings are crucial in

the development process, it obvious that the capital market is

vital to the economic development.

However, capital market in most development economic are

largely rudimentary and inefficient in the light of those

inadequacies and given recent economic and political

development sweeping across the globe and which are certain to

have effect on capital market with a view to national economic.

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This project work is designed to examine in-depth the decay of

the 1903.

Secondly this paper is aimed at critically assessing the

Nigeria capital market with a view to identifying operational short

coming and recommendation solutions.

The Nigeria capital market has been nursed from infancy to

dalliance and still growing with deregulation, industrialization,

privatization and commercialization and necessities by the

structural adjust programme (SAP) bound within the part few

year in term of capitalization and size

The number of the market has most then tripled during the

past years. The door to the profession of securities dialing has

opened more widely.

The practice has become more in other words: the Nigeria

capital has grow basically through government initiative. Thus, a

large number of the present listed company did so in compliance

with government polities the capital market has none the less,

witnessed some impressive growth.

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The number of listing for instance rose from 1961 to 2005

as at the endue 2005 of which in represented equities

government stocks and industrial with the indication of interest

in the capital market by more state administration, this has

been increase through the utilization at the market by more state

government in 1986. Measured by market capitalization Nigeria,

capital market has also shown remarkable improvement from

40.6 million in 1970 to 4.5 billion in 1980 and more increase in

yearly basis.

Trading activities and institutional development also were

boasted significantly stock broking firms record the fasted growth

moving from only 3 in 1961 to 10 in 1980 and 63 as at 1987. The

past decades also saw the expansion of the stock exchange

trading floors and increase primary market activities.

The security and exchange commission on its part

intensified its surveillance to prevent market abase and other

malpractices which may adversely affect capital market

development. It drew upset of rulers and regulations which are

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approved by federal government to guide the activities which are

seen as a major in addition it registration activities which are

seen as a major tools for investors protection had already been

initiated.

As at the same time the commission came into existence,

the level of market capitalization was 4.5 million while today the

stock market is reporting a market capitalization of about

trillions. The tremendous increase in the level of the market

which has already been dispensed with past administration

through various amendment in the nation investment and the

new drive for foreign private capitalization of over 20 billion in

the elevate ahead to be able to achieve this level of growth the

right environment must be created in the capital market

particularly the management techniques adopted in the market.

There is also need to reign exchange market (financial

commercial, foreign exchange market etc.) so that the practice in

consistent with the nation long term economic objective in any

sector of the economy are not allowed to slow down our rate of

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development. Therefore, the capital market is expected to play

more significant role as a source of fund for economic recovery

and growth. This project work is therefore expected to x-ray the

potentials if the market in accelerating economic growth and

development is of the nation during the decade ahead

1.2 STATEMENT OF THE PROBLEM

In spite of the growth of the capital market over the past

forth—three years. There is still much in efficiency in the capital

market which deserves to be remedies.

The growth has been essentially government include

through the two indigenization exercise of 1992 to 1997 and the

on-going privatization and commercialization programme and the

provision of the trusted investment act 1962 and the insurance

act 1979 which required pension fund in quoted security.

The market has therefore not really come age having failed

to claim their dividend and share certificate. Changes in address

and other relevant information are not usually reported to the

registration adding to the financial burden of quoted companies

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which are now required to publish the list of owner of unclaimed

developed and share certificate in booklets accompanying actual

report.

Infrastructural inadequacy is major hindrance to capital

market development in information discipline need to be enforced

and better stranded proscribed in the maintenance of the register

of numbers of quoted companies.

In the present area of economic deregulation the price role

of the SEC should be re-examined it is a little in congruous that

an official body should still be fixing price for willing buyers and

services however the immediate challenge lies with market

operators who should prove themselves capable of doing the job

efficiently should the EC hand –off

It has been observed that in discharging its function in this

regard the security and exchange commission appears to have

become more responsive to issue price. Stock brokers can

display greater professionalism in assessment secondary market

issue own as well as in their dealing on behalf of client but SEC

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can be credited for effort made at prodding authorized clerk

especially within the last recent years.

1.3 AIM AND OBJECTIVES OF STUDY

The paper takes a crucial look at the role of the capital

market in Nigeria economy (a case study Nigeria stock exchange).

This study is to examine the role of the stock brokers in

assessing secondary market issue as well as in their dealings on

behalf of client.

Emphasis will also be places on the role of the security and

exchange commission as the apex institution coupled with

liberalization of the nation’s investment policy the privatization of

government holding in commercial establishment and the new

drive for foreign private capital attempt will be make at analyzing

the appraisal and problem encountered by capital market in the

growth and development of Nigeria economy and possible

solutions will be suggested.

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I shall give true and fair views of involvement of the capital

market in Nigeria economics as the will serve as a basis for

future reference.

1.4 METHODOLOGY OF THE STUDY

The approach in this study is mainly description and

analytical. All data and related information have been obtained

from secondary data. All data collected are to be summarized and

compared to give the performance of the capital market in an

attempt to described economic condition in Nigeria for the

purpose of comparing the past and the current situation of the

economy.

Description research is the best choice because it is a pre-

requisite for finding answers to the questions. The problem there

is predication of what the future will be. In conclusion analysis

and interpretation shall be provided for each and every data

used.

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1.5 LIMITATION OF THE STUDY

The project shall be limited to the operations of the capital

market via. The Nigeria stock exchange which is concern with

secondary market issue role of the stock broker in buying and

selling of securities on behalf of their client

Emphasis will also be placed in industrialization

privatization and commercialization program necessitated by the

structured adjustment programme (SAP), this project work

however cannot be completed without placing emphasis on the

role of the security and authority as specific out in the security

and exchange publication.

1.6 PLAN OF THE STUDY

The rest of this study is organized into four chapters.

Chapter two will be developed to review the relevant

literature on the evolution and the development of capital market

nature and focus on regulations and appraisal of the capital

market.

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Chapter three will be on research methodology definitions

of the organization in the capital market and participate in

capital market Source of collecting data and the procedure for

processing data collection.

Chapter four will deal with presentation and analysis of the

data

Chapter five will be devoted to be summary of funding

conclusion and recommendations.

1.7 DEFINITION OF TERMS

Some terms used in the project is hereby defined for easy

understanding of this thesis

BROKERS: an intermediary who buy and sell shares on behalf of

a client in many countries broker may also act as principal in

shares transitions.

ISSUING HOUSE: a merchant bank, stock broking arrange

under writing

QUOTATION: a price made in security by market maker which

has been officially approved

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STRUCTURAL ADJUSTMENT PROGRAMME (SAP): a

fundamental reformation and orientation of the Nigeria economy

introduced in September 1986.

INVESTMENT: it is the act of putting something in the form of

property in the hope that it will yield more property at future.

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CHAPTER TWO

2.0 LITERATURE REVIEW

EVALUATION AND DEVELOPMENT OF CAPITAL MARKET

In order to fully consolidate and appreciated the

significance of the capital market there is need to high light its

historical back ground.

Capital market development in Nigeria dated back to 1946.

When the first government security was fixated through

informally since the necessary facilities for formal market ware

lacking of that time

Earlier in the same year Nigeria local development board

was established to give loans to government and its agencies for

the construction of infrastructure facilities.

The board was short-live and major capital market activity

took place. In year that followed in 1961. Market activities

resumed following the establishment of Lagos stock exchange

(LSE)

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The setting up of the exchange was principally limited by

the business community and some important government

agencies such as the central bank of Nigeria (CBN), the Nigeria

industrial development bank (NIOB) and the federal ministry

finance.

The following objective as start6edin its memorandum and

articles of association

(1) To supervise activities associated will dealing in securities

(2) Facilitate the flow of long-term capital into productive

investment and ensuring fairness of prices at which noted

securities as maintain are traded.

(3) To provide facilitates for trading of securities inception, the

exchange had seven members comprises of four in dials and

three corporate members. Could be expected, activities during

the years of the exchange were low with few listings and

trading as the market perhaps little or was not understood by

the populace the entrepreneur were reluctant to dilute

ownership of their exercise of the 1995.

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Following the report of a government committee on the

review of the financial system the Lagos stock exchange was

renamed in 1997 o the Nigeria stock exchange (NSE), with two

additional trading floors Port Harcourt and Kaduna.

A year after the establishment of the exchange and ad-10c

capital issue committees was formed in the central bank of

Nigeria to regulate public issues of securities in an effort to

ensure that the capacity of the infact market must not over

burdened, as this might impact negatively on its development.

Improvement in market activities and the indigenization

exercise of the 1970s were the main factors, which marketed the

establishment of a statutory agency for the capital market in

Nigeria. The capital issues commission (cic) was then establish in

1978, superseding the capital issues committee and ht following

mandates.

To determine the price at which share of debenture of a

company are to be sold to the public either through offer for sale

direct issues.

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To determine that timing and amount of subsequent public

issues of shares or debenture by the company and undertake

such other makers incidental or supplementary to the foregoing

as the commission may at its distraction determines.

The CIC, however, had no jurisdiction over private

companies but all public companies (quoted) and quoted) fell

under the preview.

The CIC remained operational until the Securities and

Exchange Commission (SEC) was established by the Securities

and Exchange Commission decrease 1979 (re – enable as

increase and No 29 of 1988) the decrease empowers SEC with

the twin responsibilities of resulting and developing the Nigeria

capital market with ultimate objective of protecting the investing

public and accelerating socio economic development.

According to O.J Adewunmi the Nigeria capital market in

1990s SEC hand book page 52 he quoted since 1986 when the

structural adjustment programme (SAP) was embarked upon, the

federal military government has “conserved’’ and de livered some

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fundamental economic package in an attempt to revive our

economy and put in back of the part of sub = sustainable growth

and development section 6 of the sec decree 1988 specially vests

the Sec function.

(a) Registration of the securities proposed to be offered for sale

privately with the intention that the securities shall be held

ultimately other than those to whom the offer were made

(b) Making surveillance over the securities market to ensure

orderly fair and equitable dealing in securities

(c) Protecting the integrity of the securities market against any

abused arising from the practice of insider trading.

(d) Registration stock exchange of their branches registers

investment adjures, securities dealer and their agencies for

the controlling and supervising of their activities with a view to

maintaining proper standard of conducts and professionalism

in the securities business

(e) Acting as regulatory apex organization for the capital market

including the Nigeria stock exchange and its branches to

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which it would be at liberty to delegate powers has been rapid

growth in the number of stock broking firms and issuing

house. Although, not all of these houses have participate

meaning fully in securities issues, the number continue to

grow significantly.

Thus far we have attempted to trace the antecedent, the

Nigeria capital market admittedly, the development trace here in

retrospect sketchy and has mainly attempted to highlight some of

the relevant milestone in the market evolution and development

process. Furthermore, market operation must strive to generate

awareness among market users in the concepts of efficiency

sector which have tended to depend more on current account

surplus than on capital market issues for their capital needs.

As Okigbo (year) 1981 argues in his book Nigeria financial

system this development cost of fund and resources that absorb

when they predominantly use internal finance for their expansion

schemes.

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On the part governmentally three is the need to create

incentive to induce an increase in the number of equities quoted

in the stock exchange to accelerate the page capital formation

and promote active trading in the stock market. This incentive

could be in form of tax advantages to the company whose

equities are quoted.

In the republic of Korea for instance, taxation and tax

concession are calculated in park according to the distribution of

a companies share holding structure and it is said that fiscal

policies are applied to companies that do not go to public after

the authorities may have demand them so qualified.

2.1 NATURE AND FOCUS OF SECURITY REGULATION

Like any field of human endeavor the securities are the

subject of government regulation security industry is all about

investment; investment is threat of putting in something in the

form of property in the hope that it would yield more property at

a future data.

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However, it is the taking of risk of ten the future data risk

that if thing don’t go well expected the investor would in all

probability lose his money.

Moreover, it is not often that the investor overseas the

investment. In many instance, the invest in venture controlled

and managed by others under tales into the hand of other people

who may not necessary be in control of the venture or not

management i.e. investment in the unit trust.

The investment business especially securities investment

business is very complexes undertaken business that even the

knowledgeable often find it difficult to hold his head above water,

more serious is the condition of the uninitiated ordinary

investors. The ordinary investors therefore need protection this is

because he insolvency or in competency of the people who are

put in charge of handing the savings and investment of others. It

is thus the need to protect the investing public that has primary

meditated the regulation of security business.

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2.2 OBJECTIVES OF THE SECURITY REGULATION

a. To ensure the investors are provided with financial material

concerning securities offer for public sale.

b. Since securities are not used or consumed by it purchase or

the investors but constitutes a form of currency which can be

traded in the secondary market, it is essential that there is a

continuous flow of information about the company or the

entity whose securities are being traded.

c. To safeguard against manipulative and deceptive practice,

there is therefore the need not only to monitor trading in the

market, but also to prohibit misrepresentation, deceit and

other fraudulent practice.

d. To prevent individuals, firms and companies engage in the

securities dealing from taking under advantages of their super

knowledge and access to over reach their less fortunate non

professional customers

e. Finally, it is the objective of securities regulation to person

injured through such violations.

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2.3 APPEAL OF CAPITAL MARKET

In recent times, the market was witnessed considerable

growth in new issue and listings activities as well as in the local

value of market capitalization.

This has resulted from government liberation policies and

programmes increase awareness of the market as a source of

long term funds and (to some extent), the establishment of

second over securities market (55m) in 1985 for the listings of

small, consequently as at the end of July 1997, there were 267

securities listed on the Nigeria stock exchange, 22 federal

government stock and 4

DEFINITION OF CAPITAL MARKET

Capital market can be defined as those institutions that are

concerned with providing long term claims. It is the market

where large companies and public enterprise attracts long term

investment fund through a network of financial institution and

stock broker licenses to perform capital market function in

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acknowledge of the funds mobilized by those institution bond

stock or share and mortgage are issued and traded.

In summary, it is the market for buying and selling of share

public liability company and other stock by doing so, the market

accurately performs the function of financial interdiction where

by the savings of some members of the society are mass and

made available to other member of the society for productive

investment.

ORGANIZATION IN THE CAPITAL MARKET

The capital market is divided into two categories:

a. Primary market

b. Secondary market

PARTICIPANT IN THE CAPITAL MARKET

The participant in the capital market include the stock

broker issuing house, merchant banks, development companies,

securities and exchange commission the CBN and government.

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2.4 STOCK BROKERS (DEALING MEMBERS) OF NSEI

These are dealing member of the Nigeria stock exchange to

break stock and share into liquid cash buy intermediating

between buyers and sellers of securities.

FUNCTION OF THE STOCK BROKERS

a. The acts as adviser to their client in the selection and

administration of their investment objectives and also improve

performance of their port folio

b. They make arrangement for their listing quotation of stocks

and share on the exchange that trading can take place in such

securities. Generally, thus include helping the prospective

company to prepare its prospectus.

c. They such as agent in the buying and selling at securities.

This is their most popular function and the one in which they

are mostly identified in the way. They provide liquidity for the

stock market.

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2.5 ISSUING HOUSES

An issuing house is essentially a company that arranges

the issuance of share of another company. By law a company can

issue its own share but in practice thus in hardly done in

Nigeria, the term issuing house is used to describe the corporate

finance activity of merchant bank and stock brokers. To be

eligible to act has an issuing house a company need in addition

to the expertise an ordinary member of the stock exchange. To e

stock broker, however, the companies need to be dealing member

of the stock exchange.

All stock brokers could act as issuing house if they so

desire use of agreement with this marriages.

FUNCTIONS OF THE ISSUING HOUSE

a. To underwrite the securities it issue for its client that is to sat,

to buy the securities and then to sell them later. However, the

Nigeria issuing houses, hardly ever underwrite the securities

they issue and even when due they hardly ever underrates on

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a firm so then main function of the issuing houses is to

arrange the issues.

b. Issue houses also perform other function ranging from houses

provide the same services and not all issuing houses have the

same skills and experience.

c. Therefore a potential investor is advised to shop around not

necessary on the basis at price and keep his ear to the

ground.

THE PRIMARY MARKET

The Securities and Exchange Commission sit at the apex of

the primary market regulation, the issue of public companies

and all private companies with foreign participation.

This market is concerned with the view issue angle that is

it deals with the issue and sale of new securities. The operator in

this market is the issuing houses such as stock brokers,

merchant bank, commercial bank, mortgage bank, insurance

companies the CBN and government.

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The investors pass on their resources to some of those

institutions, for investment can be inform of (stock brokers and

merchant bank).

The equally issue security of a company previously quoted

on the stock exchange which may in the course of time place

another issue in order to raise to raise an addition funds.

THE SECONDARY MARKET

This is the market for the sale and purchase of existing

share and stock, the central of activities for the secondary

market in sock exchange. It also provides market in which

holders of existing “quoked share” wishing to sell such can make

participants in the market are the stock broker’s insurance and

insurance companies pension fund managers.

TRADING MECHANISM

The trading mechanism that operates on the floor of the

exchange confuse itself to a special system known as the “call

over” system under this system, the brokers or their exchange

about 11:00am.

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All listed securities are individually from the stock

exchange daily official list (SE DOL). As each security is called,

broker indicates their interest to buy or sell by main price.

Depending on the forces of demand and supply and a client

instruction, he will make price either as “bid” or “offer”. If

however, he has both buying and selling instruction, he will

make price the lower one being his selling prices, where both

intentions are made at the same price; this is known as “cash

deal”.

As soon as these is simultaneously a buying, selling

intention for a particular security. After the summation of the

deal, there is an exchange or bargain slip. The bargain slip

represents the basic contractual documents between brokers and

shows the fact of the buying and selling transaction. It is from

the bargain slip that the contracts note are written up.

2.6 THE NIGERIA STOCK EXCHANGE

The Lagos stock exchange as incorporated in 1960 as a

company limited by guarantee. It started in operation in 1961

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due to the acceptable of the recommendation of the bar back

committee which lead to the establishment of the Lagos stock

exchange. The committee was appointed to advice on ways and

means of festering a share market in Nigeria. In 1977 it was

renamed the Nigeria stock exchange (NSE) with two additional

trading floors, bring the total number of floor to three, on each in

Lagos, Port Harcourt and Kaduna.

Memberships of the Nigeria stock exchange are four of

three categories.

a. Founding members, comprising those three individual who

subscribed to the original shares of the institution.

b. Ordinary membership after the establishment of the exchange

in 1961 by subscription to the share

c. Dating members comprise the individual films or corporate

bodies increased by the council of the exchange they are

categories into three

i. Brokers

ii. Jobbers

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iii. Spectaculators

BROKERS

The branches are the linked between the investing

company and the stock exchange. The investors wishing to buy

seller securities do not have direct assessed to the exchange

except through broker.

The broker sells or purchase stock exchange at the best term.

The brokers get in touch with jobbers who specialized in such

securities in which deal is sought.

The broker will approach more than two jobber dealing is

share of the institution requested for.

JOBBER

It is from jobbers that brokers got share quotations two

jobbers can quoted different prices for the same share securities

The two price quoted are the buying and selling prices.

The jobber is prepared to buy share of a particular company at

the lower, quoted price and sell to higher quoted price for a

broker buying, it is prudent of him to buy at the price say 87

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kobo. It means the price quoted in the offer price. A jobber must

ensure that is matches demand for and supply of security at all

times.

SPECULATORS

The main aim of speculator is profit making within a short

period of time this means he buy, share when the price s low and

sell when price is high.

The purpose of transaction in the stock exchange is there

must be perfect flow of information and under perfect market

condition. This possible change in the prices of share and other

securities can change in the near futures. Share are bought now

when the operation are convinced that prices of such share are

likely to rise in the future while share which are likely to failure

sold now.

BEAR

It is one who expected the price of the share to fall in the

future and hence buys the number of those shares, the bear may

not have the money to pay for the share, but whatever difference

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that may arise between now and the data of purchase and

settlement data is settled by the bear.

FUNCTION OF NIGERIA STOCK EXCHANGE

The exchange was established to perform the following

function:

i. To provide business and economic information via the

dually official listing on securities traded on the

exchange.

ii. To facilitate the purchase and sale of ideal and shares

since investors will be confident that they can realize

investment easily.

iii. To prescribe requirement for new listing and to regulate

secondary trading activities of its dealing members.

iv. To acts as a central meeting place for member to buy

and sell existing stock and share and for granting

quotation to new issue through stock and stock making.

These available for productive investment

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v. To act as a channel for implementing the indigenization

programme by providing facilities to foreign business to

offer their share to the Nigeria public for subscription

2.7 DEVELOPMENT BANK

In Nigeria development bank consist of some bank like

MBCI, NACK, Nigeria bank for commerce and industries NICB,

Nigeria Agricultural commercial bank (NACB), Nigeria industrial

development bank (NIDB): all those institution were set up to

provide capital on a long term basis for the establishment of

industries. NIDB for instance participant directly in may

industries project. In 1977, it had loans out starting to tiling; N

175 million NACB has the largest of 011 with and investment

pass through capital market.

INSURANCE COMPANIES

We have above 79 insurance companies (mostly life) and

130 insurance companies’ brokers operating in Nigeria. Most of

the larger companies are expatriate owned and managed while

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the rest are private Nigeria owned the ownership composition as

follows:

a. Federal or state government owned 12

b. Mixed ownership 60:40 government and foreign 16

c. Private Nigeria largest company in terms of premium is the

national insurance corporation of Nigeria (NICON), which is

wholly owned by the federal government.

Generally, insurance companies to invest 25% of their fund in

real estate for this reason insurance companies collect premium

form its client in invest in the capital market before paying back,

they will have more money to pay back to the client. Thus, in the

capital market the insurance companies now buy, sell

investment to the public.

2.8 SECURITY AND EXCHANGE COMMISSION

The Securities and Exchange Commission (SEC) is the apex

regulatory body of the Nigeria capital market 10 regulatory

supervises and monitors the activities of the capital market. It

was established in April 1976 and SEC decree 1979, it replaced

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the capital issue commission which was established in 1973, the

CIC who superseded the ad-hoc capital issue committee which

came into existence in July 1967.

The Securities and Exchange Commission decree No.29 of

1983 like it predecessor has three main objectives. These are:

a. To protect the interest of investors and there by enhance

b. Their confidence in capital market to ensure orderly, fair and

equitable dealing in securities.

c. To promote the growth and development of the Nigeria capital

market.

FUNCTIONS OF SECURITIES AND EXCHANGE COMMISSION

Section 6 to the decree vest on the commission, the

following functions are:

1. By undertaking such other activities are or expenditure for

giving full effects to the provision of the decree.

2. By creating the necessary atmosphere for the market

3. Reviewing appraising and regulation mergers, acquisition and

all form of business combination

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4. Acting as regulatory apex organization for the Nigeria capital

market including the Nigeria stock exchange and its branches

to which it would be at liberty to delegate power.

5. Protecting the integrity of the securities market against any

abuses arising from the practice of the insider trading.

6. By maintaining surveillances over the securities marked to

ensure orderly fair and equitable dealing in securities

7. By realizing all securities propose to be offered for sale to or

for subscription by the public to be offered privately with the

intention that the securities shall beheld ultimately other than

by those to whom the offer were made.

8. By determine the amount of the price and time at which

securities of a company are to be sold to the public either

through offer or subscription (the commission has increase to

perform this function following the deregulation of the capital

marketing 1998).

Second tier security market (SSM): the NSE to enter for small

and medium size companies who might desired being quoted on

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the stock exchange created the SSM in 1985 either to only large -

scale company has access to this market but it has new being

realized that small and medium, sized projects constituted and

invaluable existence for economic growth in the third would

countries. By his small and now apply to the security market for

public placement.

CERTAIN CONDITION MUST BE FULFILLED BEFORE A

COMPANY IS REGISTERED

1. The organization must be listed liability company

2. All company wishing to be listed must go through stock

brokers

3. The company must submit financial statement for last 3

years and subsequently submit half yearly audited

accounts

4. The company must be sign an undertaking to obey the

rules of the exchange.

5. The amount to be raised by the company must not exceed

N5m

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6. The chief promoter must not have more than 70% of the

equity investment.

7. At least 10% or N50,00 or the equity capital must be made

available to the public.

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CHAPTER THREE

3.0 RESEARCH METHODOLOGY

INTRODUCTION

According to FAGBO HUNGBE research design coaxial be

described as the blue print that allows a researcher to provide

solution to the problem of who study, what to study and how to

generate data in research situation.

This chapter will layout the broad method employed by the

researcher to obtained relevant data for the research study. The

chapter will outline the research population being studied, the

brief outline of the chapter, the nature and sources of data, the

procedure and administration of data collection instrument

analysis of data and method of data analysis.

3.1 RESEARCH POPULATION

According to OWANOA “the term population is social

research defined all the members of the target group with a

geographic area as specified by the aims and objectives of the

study being conducted. Population of this research project

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considered of the Nigeria stock exchange (NSE), the student and

the public.

3.2 BRIEF OUTLINE OF THE CHAPTER

This chapter will be devoted to research methodology

definition of capital market organization in the capital market.

Participants in the capital market the sources of data method of

collecting data and procedure for data collected.

3.3 SOURCES OF DATA

The sources of data for the research study was the primary

source of data the primary source of data used here, waste one

extracted from the publication of the secondary sources was

collected from Nigeria stock exchange hand book journals of

different kind and financial Journals.

3.4 PROCEDURE AND ADMINISTRATION OF DATA

COLLECTION INSTRUMENT

In all a total of thirty (30) questionnaires were administered

and after which the will filled questionnaires were collected. The

questionnaires were distributed in following manners.

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3.5 ANALYSIS OF DATA

The analysis of data would be through

(a) The simple percentage method: this will be employed in

analyzing closed ended questions and by the chi-square (x2)

statistical analysis method: which will be used in testing the

hypothesis formulated.

The chi-square techniques test whether the observed

frequencies are sufficiently used to the expected ones to be likely

to have null hypothesis (HO):

Null hypothesis HO: where Oi and Eii are observed and the

expected frequent alternative hypothesis (Hi) Oi=Ei

The null hypothesis will be tested by xss= E(Oi-Ei)2

E

Where:

Oi= observed number of cases categorized

Ei= expected number of cases in the category under Ho

E= direct one to sum overall (x) categories

- 41 -

DECISION RULE

If calculated value is greater than critical value reject null

hypothesis, but if otherwise accept null hypothesis. Hypothesis

will be tested at 5% level of significance. The degree of freedom is

denoted with D.F and calculated as F=10=1 where n is the

number of observation.

3.6 METHOD OF DATA ANALYSIS

The research collected all the data through the personal

interview and answering the question is prepared to the staff of

PZ Nigeria plc.

The personal interview was carried out through the

personal interaction with the staff of the firm which helps to

collect some useful information on the project work. In this

method of personal n\interview effort was made to present data

collected and analytical explanation of how each hypothesis was

measured.

The presentation and analysis of data collected shall be

made through the use of table. The data needed employee were

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both interview questionnaire which shall be in table form this

was achieved in the time of the questionnaire presented of the

form as regarded the area of interest during the course of the

study.

POPULATION SAMPLE SIZE PERCENTAGE %

1. Top/middle level of officers

12 40%

2. Low level officers 5 17%

3. Student 5 17%

4. Shareholder/public 8 26%

Total 30 100%

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CHAPTER FOUR

PRESENTATION AND ANALYSIS OF DATA

4.1 BRIEF INTRODUCTION OF THE CHAPTER

In this chapter, an attempt was made to show trends and

Patten of association and relationship among the data collected.

The presentation and analysis will be in tabular form.

4.2 PRESENTATION AND ANALYSIS OF DATA

Data is defined as quantitative information analysis can be

defined as the breaking down and ordering of quantitative

information gathered through research work. It also involved

searching of trends and pattern of association and relationship

among the group of data. Data tabulation is the process of

treating data for further analysis by the use of tables.

VALUE OF TRANSACTION ON THE NIGERIA STOCK

EXCHANGE 1967-2008

YEAR GOVERNMENT

SECURITY

INDUSTRIAL/EQUTY TOTAL

1967/67 11,467,380 1,039.036 12,506.416

1968/6 13,692,680 2,450.924 16,143.604

1968/70 15,692.680 1,121.630 16,846.430

1968/71 11,704 800 675.616 12,380.97

1968/73 17,330,820 102,294 17,433,114

1968/74 14,634.480 221,800 15,856.280

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1968/75 30,544.260 3,080.100 33,624,360

1968/76 26,738.520 1,308,2422 39,624,360

1968/77 26,125.520 671,534 26,797,054

1968/78 98,348.520 1,261.995 99,610.152

1968/79 63,664.830 549,322 64,214.152

1968/80 86,634.830 788.853 9,452.283

1968/81 153,849.760 2,271.990 156,121.750

1968/82 226,961.915 3,045.040 230,006.955

1968/83 143,500.740 19,32.401 145,433.141

1968/84 512,034.22 1,816.784 522,851.006

1968/85 325,178.957 6,119.169 332,298.616

1968/86 208,215.689 8,188.927 216,404,616

1968/87 384,870.312 13,000.755 249,818.401

1968/88 234,115.541 15,702.860 249,828.154

1968/89 284,840.413 23,264.741 311,105.154

1968/90 475,840.413 11,986,121 487,832.33

1968/91 282,251.808 4,045,706 286,297,514

1968/92 215,829,622 34,485.043 250,314,905

1968/93 582,430,369 71,129,746 653,560,115

1968/94 172,801.696 133,540,209 306,341,905

1968/95 92,675,515 14,864,629 234,540,144

1968/96 85,020,960 406,547,508 49,568,468

1968/97 84,258,773 577,790,589 662,1049,353

1968/98 15,202,218 970,679.018 985,881.236

1968/99 0 1,838,838,622 1838,838,622

2000 140,006,262 10,932.044,322 11,07250587

2001 15,558,832 13555289,669 1357084849

2002 827,121 14,081,521,735 14,082,384,501

2003 8,120,399 28,146,458,410 2815457881

2004 24,591,381 57612,604,539 245913815

2005 1,009,564,210 59,311,382,162,08 245913815

2006 281,160,000 120,421,876,169,35 1204246877

2007 300,015,175 227,520,515,5607 2275235157

2008 7,321.040,00 255,616,316.433,28 2556895268

Source Nigeria Stock Exchange Fact Book 2008

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4.3 ANALYSIS OF DATA

Using correlation analysis

The analysis of the data presented will base on the last

Five (5) year i.e. 2004-2009

Period year

Government stock

Industrial X2 Y2 Xy

N billion (x) Stock n

billion(y)

2004 0.008 28 0.000064 784 0.224

2005 0.024 57 0.0000516 2349 1.368

2006 1 59 1 3481 59

2007 0.28 120 0.0784 14400 33.6

2008 0.3 225 59 65,025 1785

2009 7 225 59 65,025 1785

8.612 744 60.169 134,083 1,940.8

NE Xy-E X EY

R= (nex2- (ex)2) (n ey-(EY)2)

(5x1946.8-(8.612x74)

R= (5x60.169)-8.6122) (5x134083-7442)

(670,415-553 5336)

R=226.68 x 116 879

= 9734-637.288

= 2649413.7

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r = 9096.7

= 51472.3

r = 0.18

INTERPRETATION

This indicate that there is moderate level of correction exist

between the government and industrial stock in the capital

market.

Therefore, we concluded our analysis base on the data

presented earlier that has the government stock improved so at

the same time the industrial stocks improved.

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CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

5.1 SUMMARY

The summary of this project work will over the chapter one

to four. Chapter one place emphasis on the problem inherent in

the capital market which deserve to be remedied the aims and

objectives of the study. The methodology of research and

research and delimitation of Nigeria stock exchange

Chapter two briefly explored the growth of capital market which

hesitated in setting up of regulatory body like the capital issue

commission (1973). The Nigeria stock exchange (1977) re-enacted

1988 to therefore the market which include the stock brokers/

issuer if house merchant banks development banks. Nigeria

stock exchange the CBN and government

Emphasis was placed on trading mechanism that operate

on the floor of the exchange where by all listed securities on the

stock exchange daily official were offered to the public at different

price for subscription.

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Chapter four place emphasis on the presentation on data

analysis of the same in tabular form

5.2 CONCLUSION

The Nigeria capital market has witnessed a burst in the last

decade and it was the absent that the market will become more

dynamic in the year head. In my view the Nigeria capital market

has a great potilnticy but its failure growth and develop,

development will depend large on the degree of freedom permitted

in dealing in the market place among player especially in pricing

of securities, the tightening and maintenance of struck discipline

with regard to ethnical and the institution of the production of

while tax in centered to stock market operation to enhance

development in the decade ahead.

5.3 RECOMMENDATIONS

To improve the operational efficiency of the capital market,

the following suggestions were advocated

(1) Market operation especially issuing house should prove the

pricing function should SEC hand over the pricing impart.

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(2) Great discipline and better standard should be enforced

through most importantly training and human development of

all sectors of capital market.

(3) Information facilities especially information technology which

is dependent on the effinicing of NEPA, NITEL, NIPOST Etc

should be improve upon in the regards effort of fully automate

the market and abolish the call-over system presently applied

should begin to receive adequate attention.

(4) Share price movement and a dynamic secondary market

pricing policy should be encourage in face liberal pricing

policy that would yield reasonable capital gains to

entrepreneurs seeking quotation should be adopted.

(5) The issue of unclaimed divided should be given due

consideration. All prospective invest into which divided are

directly paid into this would go a long way to reduce the

problem of unclaimed dividends.

(6) The issue of 5% ownership and widespread ownership

especially as 16 affects privatize issue should be revisited. The

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capital market should been seen and practically allowed to

become into industrialist institution in veritable medium for

capital mobilization opposed to wealth distribution.

(7) Capital market committee and association of various market

operations should be encouraged by the SEC.

(8) The information of investment trust in which oversea investor

can also invest should be seriously, considered schemes

should be implemented without any further delay.

(9) The liquidity ratio of the market should be improved

deliberately may be through a mandating provision of under

writing commitment to respective issuing houses.

(10) The issue of unclaimed dividend should be given due

consideration as regards there dividends are directly paid into.

- 51 -

BIBLIOGRAPHY

Alle Q.I and Anao (1996): the Nigeria stock exchange Lagos

Page 34-37 business time Monday September 1998

Vol 23, No 37 page 3 fact and figure on the Nigeria capital

market (1993 edition).

Facts books Nigeria stock change (2005)

Okigbo P.C (1981) Nigeria financial system structure and

growth London Longman

SEC annual report and account (1991)

Securities Law report (vol 1, 2, 1992)