Stock Exchange

How to trade Stocks in Nigeria? A beginners’ guide

The trend of stocks trade has been steadily picking up throughout the world since the advent of electronic trading in 1970.

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In the past decade, there has been increased participation of the millennials in the Stock market through online trading apps like Robinhood and E-Trade which has given boost to trading figures.

Nigeria too has seen growing interest in online trading with both millennials and older stock traders using local trading platforms.

But it has been noticed that many new traders generally tend to ignore the basics and risk factors related to trading while trying to book significant profits in turn they end up losing money. To make better profits, it is important to understand the details of the stock market and guidelines related to stock trading.

Below is our complete guide for the beginners to start stock trading in Nigeria.

What are Stocks or Shares?

A stock or share represents the ownership of the company or corporation. Owning shares of any company means that the shareholder owns a part of the company’s or corporation’s asset and earnings.

All the shares that are held by external investors of a company are called outstanding shares. Suppose if a company has 500,000 outstanding shares, then owning 50,000 shares means owning 10% of the stakes in the company.

Any company or corporation that exists in the world is either public or private. A private company is generally owned by a few individuals who can be founders, management, or private investors. A public company is a company in which common people or general public can own stakes besides the company promotors or founders – by buying a portion of shares offered in an initial public offering or through

Stock exchange.
For example, Aliko Dangote owns shares of Dangote Group, Elon Musk owns shares of Tesla. In simple terms, if you wish to own a part of any company, you will buy its shares.

The value of these shares keeps changing due to the performance of the company and many other factors. The frequent buying and selling of shares with an aim to book profit is called as stock trading. 
How Does Stock Trading Work?

The act of buying and selling of shares from stock exchange with expectations to book profit is called stock trading while accumulating the stocks for a long term is called stock investing. Traders who generally buy and sell the stocks on the same day are known as day traders.

A Stock exchange is a secondary market where all major shares of public companies are traded.

Exchange matches the potential buyers and sellers of shares of listed companies on the exchange. This means that if you buy shares of any company, you are buying from other shareholders who want to sell through the stock exchange.

For example – Tesla, Microsoft, Alphabet, Guaranty Trust Bank Plc are traded publicly on stock markets and investors can buy & sell them on exchange.

Only Public Companies are allowed to trade publicly on a stock exchange that means outside investors or general public can invest in them through stock market. This is a way for companies to raise capital for business expansion or raise initial funding in case of IPO. Every new company has to register itself through Initial Public Offering (IPO) on an exchange.

Investors normally earn income from company’s profits as dividends or by speculation on share value as day trading or value investing in the stock exchange.

Individuals can buy and sell shares of any listed company at varying prices from the stock market.

Companies are not allowed to take part in stock trading but they can buy back their own shares or issue more stocks.



Paypal’s Venmo now permits cryptocurrency trading

Venmo, a mobile payment service owned by PayPal has announced that it has started allowing users to buy, hold and sell cryptocurrencies on its app. Just like PayPal, Venmo will support four different cryptocurrencies: Bitcoin, Ethereum, Bitcoin Cash, and Litecoin, and users can carry out transactions with as little as $1 on the app

Founded in 2009, Venmo has over 70 million users and it is one of the most popular payment channels in the US. The payment platform processed around $159 billion in payments last year.

Since the app functions like a social network, adding cryptocurrency will offer a more user-friendly feel for people who love buying and selling crypto.

READ: CBN resumes $100m weekly sales for SMEs, school fees

As bigger companies show more interest in cryptocurrency, there will be wider adoption of virtual currencies in future. Venmo is the latest payment app that is offering support for cryptocurrency on its platform.

Paypal, the parent company of Venmo is one of the most active companies in the crypto space as it allows users to buy, sell and hold cryptocurrencies in their digital wallets. Paypal users can also spend their coins at millions of merchants globally.

Crypto on Venmo is enabled through PayPal’s partnership with Paxos Trust Company, a regulated provider of cryptocurrency products and services.

What they are saying

Darrell Esch, Venmo’s Senior Vice President and general manager said “Our goal is to provide our customers with an easy-to-use platform that simplifies the process of buying and selling cryptocurrencies and demystifies some of the common questions and misconceptions that consumers may have.”



Why SEC banned investment technology platforms from offering foreign stocks to Nigerians

  • Some big-name investment technology platforms that allow Nigerians to invest and trade in stocks listed on the Nigerian and foreign stock exchanges have been declared illegal by the Federal Government.
  • A circular issued on April 8 2021, by the Nigerian Securities and Exchange Commission warned unregistered investment tech platforms against providing foreign securities.
  • Chaka, Trove, Bamboo, and Risevest are among the investment tech platforms required to secure a license before continuing operations.

What’s the issue?

The Securities and Exchange Commission (SEC) on Thursday issued a directive on the “proliferation of unregistered online investment and trading platforms” in the country, declaring that only foreign securities listed on any Exchange registered in Nigeria may be issued, sold or offered for sale or subscription to the Nigerian public.

In other words, foreign stocks such as Microsoft, Tesla, Amazon, Netflix, which are currently not listed within Nigerian jurisdiction, should not be offered to Nigeria-based residents and businesses.

Why did SEC ban investment technology platforms from offering foreign stocks to Nigerians?

The SEC is using its jurisdiction to remind participants and investors that only approved securities can be sold to the Nigerian public.

Sections 67-70 of the Investments and Securities Act (ISA), 2007 and Rules 414 & 415 of the SEC Rules and Regulations, states that only foreign securities listed on any Exchange registered in Nigeria may be issued, sold or offered for sale or subscription to the Nigerian public.

In the circular issued, the SEC added that “CMOs who work in concert with the referenced online platforms are hereby notified of the Commission’s position and advised to desist henceforth.

The Commission enjoins the investing public to seek clarification as may be required via its established channels of communication on investment products advertised through conventional or online mediums.”

According to Techcabal, the SEC’s action is within its powers, and in fact, these rules show that the investment-tech model of offering foreign stock to Nigerians is illegal. But this is hardly an indictment of these startups; it’s instead a reflection of how fast innovation moves.

Critics also say that the new directive by the SEC is because of the surging shares of big tech companies such as Amazon, Microsoft, Apple, Netflix and Google-parent Alphabet that have all led the market higher in recent weeks. Young Nigerians have been leveraging these new investment tech service providers to help diversify their portfolios, and with as little as $5, anyone can get in on the action happening outside the Nigerian Stock Exchange.

Who would be affected?


dangote group

Price War: Dangote Petitions Trade Ministry, Wants BUA Sugar Refinery Shut Down

A major war has been raging in the Nigeria sugar industry for some time now and the bubbles seemed to have burst with Dangote s decision to petition the Federal Government asking the Ministry of Trade to shut down BUA Group’s Sugar Refinery located in Port Harcourt.

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In the letter dated 28th January 2021 signed by Aliko Dangote himself as the Chairman Dangote Industries Limited, the billionaire claimed that when the BUA Sugar refinery was opened , he warned the Government and they told him that no new refinery would be allowed to operate in Nigeria’. Dangote accused BUA of operating with impunity by contavening the laws as laid down in the National sugar policy by selling it’s products locally instead of producing for export alone.

BUA in its own defence sent to the Honourable Minister of Trade however clarified issues by stating that the law allows it to sell inside Nigeria.

BUA also warned that DANGOTE group and the other major player have not been involved in any backward integration project, rather they depend on 80% raw sugar allocation which is detrimental to the Nigerian economy in long term analysis.

BUA on the other hand has been involved in backward integration project with BUA’s Lafiagi Sugar BIP set to be completed in 2022.

Over 250million dollars is believed to have been spent on the export focused BUA sugar refinery already and it is also employing over 1,000 Nigerians.

Meanwhile, BUA also noted that at the centre of this fight to force FG to close BUA Sugar refinery down is the price war.

Insiders said last year, before Ramadan, sugar sold for around 18,000 Naira per bag. But as Ramadan fasting started the price jumped to 30,000 per bag. The people had no choice but to buy it because they needed a lot of it during the period.

So the manufacturers were smiling to the bank. BUA group noticed the trend and decided that it had to change. There was no reason to increase the price during Ramadan simply because the demand is high.

Usually the increase happens about one month to commencement of fasting.

When the other manufacturers got across to BUA, Samad Rabiu refused. They put pressure on him, saying it was the right time to make good money but he put his feet down.

After failing to do that, they petitioned the Federal Government that he was breaking the law by selling sugar locally instead of for export.

A source however claimed that already, BUA group has dragged the Trade Minister to court to ensure that the operations of the sugar refinery is not tampered with all because of the desperate attempt by Dangote Group to monopolize the sugar trade in Nigeria

Our reporter has seen copies of the letters from Dangote to the Minister, the Minister’s letter to BUA as well as BUA’s reply to the Minister.


Trade sector

Afreximbank, NEXIM sign $50m deal to boost Nigeria’s trade sector

African Export-Import Bank (Afreximbank) and the Nigeria Export-Import Bank (NEXIM) have signed a Memorandum of Understanding (MoU) to establish a Joint Project Preparation Fund. This will provide early project preparation financing and technical support services to public and private sector organisations operating in Nigeria’s trade sector.

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Signed on 20 February 2021, the MoU provides that Afreximbank and NEXIM will collaborate through the Joint Project Preparation Fund to unlock investments into sectors such as export manufacturing, agro-processing, solid minerals development and beneficiation services, as well as healthcare, Information, and Communications Technology, and creative industries.

The Joint Project Preparation Fund will support public and private sector investors by providing technical and financial support services that will result in a steady pipeline of well-structured, bankable projects that Afreximbank, NEXIM, and other financial institutions can readily fund.

The Fund will assist the early development process of projects from concept stage to bankability by covering the preparation of feasibility studies, project development and advisory services and related costs.

Afreximbank and NEXIM aim to mobilise up to US$50 million in the form of project preparation funds for investments in Nigeria.

Benedict Oramah, President of Afreximbank, said, “The execution of this Memorandum of Understanding marks yet another significant milestone in our collaboration with NEXIM. I am particularly pleased that Afreximbank and NEXIM are boldly venturing upstream to help investors develop well-structured projects that meet market standards.”

This intervention is timely and the Fund will play a catalytic role in accelerating the diversification of the Nigerian economy by ensuring a steady flow of bankable projects in priority tradable sectors in a timely manner.

In addition to enhancing bankability, the Fund will, on a case-by-case basis, undertake feasibility studies to assess the viability of accessing markets in the sub-region, thereby promoting intra-African trade under the AfCFTA.

This replicates a similar initiative that Afreximbank pioneered in Malawi in partnership with Malawi Export Development Fund (EDF).

Abubakar Abba Bello, managing director of NEXIM, said his bank was pleased about the partnership opportunity with Afreximbank.

This will resolve the challenges associated with the shortage of credit in Nigeria’s trade sector.


Export Trade

Ecobank Reiterates Its Commitment As “The Partner Of Choice For Export Trade”

Ecobank has reiterated that it remains the partner of choice in Africa for export trade because of its unique positioning, wide network, pan African payment switch, settlement capabilities, award winning digital products and strategic focus.

READ ALSO: Nigeria’s 2021 Oil Market Playbook: Eyeballing Opportunities and Mitigating Threats

Kola Adeleke, Executive Director, Corporate Banking, Ecobank Nigeria made this assertion while speaking on African Continental Free Trade Area (AfCFTA) strategy, opportunities, challenges in export and trade at Ecobank/Nigerian Export Import Bank (NEXIM) webinar for exporters on Thursday.

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He maintained that the pan African bank has structures in place to enable exporters exploit the opportunities in The African Continental Free Trade Area (AfCFTA).

According to him, “Our unique positioning in 33 African countries enables us leverage our extensive network to reduce the number of financial partners and relationships in executing trade.

We own the switch connecting countries where we operate across Africa. This centralized switch enables easy integration. We possess knowledge of the local markets in which we operate resulting in unparallel financial advisory. 

We offer real-time settlement across Africa and our customers enjoy instant transfers across 33 African countries.

Ecobank has a reputation for developing innovative products as the bank has won us several international, regional and local awards and we aspire to be the gateway to pan-African payments and trade.”

Mr Adeleke reaffirmed that Nigeria is poised to gain from the investment and trade opportunities that the AfCFTA will inevitably bring because of its market size, supply chain infrastructure and an abundant supply of professionals/skilled players in various industries.

He emphasized that businesses must strategically position themselves, endeavour to understand the dynamics of the ratification to be able to maximize the benefit and opportunities.

Adeleke, who regretted that export potentials in Nigeria is largely untapped due to focus on oil revenues, reiterated that real sector credit opportunities to utilizing the AfCFTA includes Export development financing, trade finance, Export development financing and SME financing.

In his presentation on Export Trade Insurance, Bashar Garba Illo, Acting Head, Export Credit Insurance, NEXIM, said the Export Credit Insurance (ECI) is designed to protect exporters in Nigeria against the risk of Non-Payment for goods and services exported on credit terms with a cover against Political Risk, stressing that the objective of ECI is to indemnify both Internal and External exporting customers from losses incurred from any payment default that could arise from political events in the export destination country by providing cover up to 80% of the value of receivables, subject to the Risk Asset Acceptance Criteria (RAAC) outlined for Political Risk. He explained that the Bank’s mandate is to support non-oil export sector of Manufacturing, Agro-processing, Solid Mineral and Services.

Also at the session was Chijioke Uzoukwu, Head of Trade, Ecobank Nigeria, who listed  the Ecobank products and services on offer to support Export Trade as comprising letters of credit, bonds, guarantees as well as bills for collections avalization. He said  “the Bank also provides loans for business such as import loans, export loans and supply chain finance. In the trade service, we support customers from initiation to execution in the areas of documentation and compliance, working with regulatory bodies and other stakeholders. We also offer trade advisory solution like market information across Africa, trade specialist support and after sales services. We have an electronic e-trade platform which provides an electronic frontend where the customers can initiate transactions and instruction from the comfort of their home and it will be delivered to the Bank. We also have various collection channels to optimize collections for business like in-branch products, Mobile App, POS, Web/ Online collection platforms, Ecobank Pay, Omniplus and Omni lite. The Omni plus has the capability to allow you to make bulk payments and also view your accounts with other banks in a single platform.”


First trade deficit in 4yrs as COVID hurts exports

Nigeria records first trade deficit in 4yrs as COVID-19 hurts exports

Africa’s largest oil producer posted a N7 trillion trade deficit in 2020, with exports falling as much as 35 percent, according to data published, Tuesday by the National Bureau of Statistics.

For the first time in four years, Nigeria’s trade position was negative in 2020 as the pandemic crushed oil demand and sent the revenues of oil exporting countries tumbling.

READ ALSO: Nigeria can save N3.7trn by gutting inefficient MDAs

Africa’s largest oil producer posted a N7 trillion trade deficit in 2020, with exports falling as much as 35 percent, according to data published, Tuesday by the National Bureau of Statistics.

That compares to a surplus of N2.23 trillion recorded in 2019, with imports outweighing the county’s value of export.

A trade deficit occurs when a country’s imports exceed its exports during a given time period.

When that happens, the said country is denied the gains of foreign exchange which comes from the exports of commodities to other trading countries.

The huge trade deficit largely explains why Nigeria’s naira ran into troubled waters last year as Africa’s most populous nation was starved of the needed foreign exchange that would have helped in the accretion of the external reserves, and give monetary authorities the legroom to defend the naira from falling against the dollar.

Nigeria’s trade balance stood at N32.4 trillion with imports rising 17.32 percent to N19.9 trillion in 2020 from the N16.96 trillion in 2019, while exports fell 34.75 percent to N12.5 trillion from N19.2 trillion in 2019.

The last time the country witnessed a deficit in its trade was in 2016, when a collapse in the oil market and a restiveness back home in the Niger Delta region, slowed the growth of oil exports, the country’s biggest export commodity.

At that time, Nigeria recorded a deficit of N290 billion.


Okonjo Iweala

Okonjo Iweala’s WTO win is inspirational, but ….

Before Okonjo Iweala, No woman has ever been elected governor in Nigeria since independence in 1960, whereas in the United States, 43 women have served or are serving as the governor of a US state and three women have served or are serving as the governor of an unincorporated US territory, underscoring Nigeria’s poor record at gender equality.

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Although Ngozi Okonjo-Iweala’s win as the first woman and African director-general of the World Trade Organisation (WTO) serves as an inspiration for women, it does not translate to Nigeria making much progress on gender equality.

According to the United Nations Children’s Fund (UNICEF), gender equality means that women and men, and girls and boys, enjoy the same rights, resources, opportunities, and protections.

“While we draw up lessons and inspiration from her, I doubt that it would suddenly change our gender ranking globally because she is just one person,” said Motunrayo Alaka, ‎executive director at Wole Soyinka Centre for Investigative Journalism.

Alaka said that the country is doing very poorly in terms of intention to change the status quo.

According to data from a 2020 Global Gender Gap Index by the World Economic Forum (WEF), Nigeria ranked 128th out of 153 countries.

The report which measures the progress made towards gender parity also showed that out of the four indicators – economic, education, health, and political empowerment – used to benchmark the ranking, Nigeria improved in economic empowerment index, while the rest regressed.

Fabia Ogunmekan, executive secretary, Women in Successful Careers (WISCAR), said that Okonjo-Iweala’s win would inspire more women to succeed.

“I believe that we will see the ripple effect of what she has achieved in the near future, as institutions will leverage her story as a case study for how women in the workplace can achieve career longevity and success in their chosen fields of endeavour,” Ogunmekan said.

Globally, women and girls represent half of the world’s population and, therefore, also half of its potential. And it is believed that women now play a very vital role in human progress and have a significant place in society.

However, gender equality in Nigeria is constrained by cultural practices which elevate patriarchy to an absurd degree.

This is why a gender equality bill, designed to eradicate gender inequality in politics, education, and employment, has been marooned in the national assembly for close to 10 years.

“Okonjo-Iweala’s win is supposed to improve our march to gender equality but in a society like ours, it is not certain,” said Tinu Mabadeje, a nonviolence training consultant. “We just hope that this will convince our leaders that women can do as well as men if given the right opportunities.”

Prior to independence, and even before the advent of colonial rule, the role of a woman in society had significantly changed as Nigeria had an admirable array of women who had done great, inspiring deeds and even conquered territories.

Glaring examples were Margaret Ekpo, a women’s rights activist and a social mobiliser who was a pioneering female politician in the country’s First Republic and a leading member of a class of traditional Nigerian women activists, many of whom rallied women beyond notions of ethnic solidarity.

There was Funmilayo Ransome-Kuti, a teacher, political campaigner, women’s rights activist, traditional aristocrat, and the first woman to drive a car. Her political activism led to her being described as the doyen of female rights in Nigeria. She was also regarded as ‘The mother of Africa’.

In recent times, the example of Oby Ezekwesili, who served first as minister of solid minerals and later as minister of education under the Obasanjo presidency, is instructive. Ezekwesili also served as the vice-president of the World Bank’s Africa division from May 2007-May 2012 and was a 2018 nominee for the Nobel Peace Prize.



How Africa’s free trade pact can boost regional economy

Again, the need for inter-African trade has been stressed by the World Bank as it says the African Continental Free Trade Area (AfCFTA) could boost regional income by 7 percent or $450 billion, speed up wage growth for women, and lift 30 million people out of extreme poverty by 2035, if implemented fully.

The World Bank said in a new report on Monday.

In addition, experts say the trade pact will position Nigeria’s firm to compete better in the continental and global markets.

AfCFTA represents a major opportunity for countries to boost growth, reduce poverty, and broaden economic inclusion.

The report suggests that achieving these gains will be particularly important given the economic damage caused by the COVID-19 (coronavirus) pandemic, which is expected to cause up to $79 billion in output losses in Africa in 2020. The pandemic has already caused major disruptions to trade across the continent, including in critical goods such as medical supplies and food.

Most of AfCFTA’s income gains are likely to come from measures that cut red tape and simplify customs procedures. Tariff liberalisation accompanied by a reduction in non-tariff barriers—such as quotas and rules of origin—would boost income by 2.4 percent, or about $153 billion.

The remainder—$292 billion—would come from trade-facilitation measures that reduce red tape, lower compliance costs for businesses engaged in trade, and make it easier for African businesses to integrate into global supply chains.

It could be recalled that initially, the Manufacturers Association of Nigeria (MAN) was the biggest opposition to the AfCFTA, arguing that ratifying the agreement could kill industries in Nigeria. MAN had said it was important for Nigeria to position local manufacturers for competitiveness first before ratifying the AfCFTA.

However, the association later made a U-turn, saying African nations needed to trade more with one another.

“MAN recognises the imperativeness of creating a beneficial free trade area for export of the products of members and has strongly worked assiduously to promote the articulation of evidence-based positions on AfCFTA,” Mansur Ahmed, president of MAN, said at a South-West sensitisation workshop in Lagos in February 2020.

The Lagos Chamber of Commerce and Industry (LCCI) is backing the trade deal, arguing that if smaller African countries are not afraid of it, Nigeria with 200 million people and humongous $430 billion GDP, must grab it with both hands.

Muda Yusuf, director-general, LCCI, told BusinessDay in 2019 that multinationals would be the biggest beneficiaries when the AfCFTA started.

“Mostly multinationals and large enterprises are in a better position to gain from AfCFTA because their economies of scale will improve. They have the big market and the capacity,” Yusuf had said.

“The continental trade is more about economies of scale and the amount of what you produce. The higher you produce, the lower the unit cost, which is why small companies will benefit but not as much as large firms,” he further said.

AfCFTA seeks to liberalise trade among African countries. It is targeted at a ‘borderless’ Africa, with an eye on a single market for goods and services on the continent. It was supposed to start in July 1, 2020, but has been postponed to January 2021 owing to COVID-19 pandemic.

Experts believe AfCFTA is easily the largest trade agreement since the World Trade Organisation (WTO) in 1994 and a flagship project of Africa’s Agenda 2063, targeted at creating a single market for 1.2 billion people and exposing each country to a $3.4 trillion market opportunity on the continent.

The AfCFTA is expected to raise Africa’s nominal GDP to $6.7 trillion by 2030 if all the countries sign up.

The treaty liberalises 90 percent of products manufactured in Africa, meaning that a country can only protect 10 percent of its local industries.

Bismark Rewane, CEO, Financial Derivatives, said the AfCFTA would favour Nigeria, Kenya, Egypt and Ghana, among others, but warned that any government that was not effective would fail within the AfCFTA environment.

“Nigeria will benefit. But it will forced to be effective because if not, people can easily go to Cotonou to set up plants,” he told Channels TV in 2019, adding that government failures would be glaring under the trade arrangement.

by Hope Ashike and Odinaka Anudu