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;
i.
which activities of the Nigerian Stock Exchange is in relation to the Privatization of Public
Enterprises?
ii.
To what extent has the Nigerian Stock Exchange contribute to Economic
development and growth?
iii.
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
= (β0
+ (β1
pripub + µ
The
model expressed in estimation form will be:
BDP = (βo + β1X1
+ µ)
Where
|
βo
|
=
|
Autonomous
(Intercept)
|
|
β1
|
=
|
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
= βo
+ β1
pripub + µ
|
|
βo
|
=
|
Autonomous
(Intercept)
|
|
β1
|
=
|
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
= βo
+ β1
mktcap + µ
Where
βo = Autonomous
(Intercept)
β1 = 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.Q
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