The Nigerian capital market has continued to play its traditional role of mobilising medium to long-term funds for development purposes. The Securities and Exchange Commission (SEC) is the regulatory authority of the market and the operational institu tions are the Nigerian Stock Exchange, the issuing houses and the stock broking firms. The capital market consists of the primary market for new issues of securities and the secondary market for trading in existing securities. So far, trading floors exist at Kaduna, Kano, Port Harcourt, Onitsha, lbadan and Abuja. Activities in both markets have increased tremendously over the years. For instance, in 1997 a total of 37 issues involving N4.207.5 million shares worth NI 0,467.3 million were raised in the primary market. In the same year, the total number of stock brokers trading on the secondary market was 164 while market capi talisation was N281.8 billion. The activities have been boosted by the privatisation programme. One significant development in the capital market is the establishment, in April 1985, of the Second-Tier Securities Market (SSM). This market caters for the small to medium scale enterprises. There is also the Unit Trust Scheme, the first of which com menced operation in December 1990. As at the end of 1997, there were 14 unit trust schemes.
The capital market has undergone tremendous reforms in recent years. Among these is the intro duction of Central Securities Clearing System (CSCS), an automated clearing, settlement and delivery system aimed at easing transactions and fostering investors' confidence in the market. Equally important is the linking of performance information on the NSE to Reuters International System in order to disseminate relevant market information to subscribers. The Abacha regime promoted the establishment of another Stock Exchange, the Abuja Stock Exchange by Federal Government agencies. Although SEC has approved its establishment as of the beginning of year 2000, it had not commenced operations. There are speculations that the project may be abandoned.
Development Finance Institutions: These are specialised banks established to contribute to the development of specific sectors of the economy. They consist of the (i) Nigerian Industrial (iv) Development Bank (NIDB) established in 1964 to provide credit and other facilities to industries; (ii) Nigerian Bank for Commerce and Industry (NBCI) established through Decree No. 22 of 1973 to develop indigenous enterprises; (ili) Nigerian Agricultural and Co-operative Bank (NACB) estab lished in 1973 to finance agricultural development projects and allied industries; (iv) Nigerian Education Bank (NEB) established to replace the former Students' Loans Board and provide loans to needy students; (v) Urban Development Bank (UDB) established through Decree No. 51 of 1992 to provide financial resources to both the public and private sectors of the economy for the development (v) of urban dwellings, mass transportation and public utilities; and (vi) the Nigerian Export Import Bank (NEXIIVI) established to finance exports and imports, and to provide export credit guarantee and insurance to Nigerian exporters. At various times, these institutions have contributed to the develop ment of the country. However, in recent years, the operations of some of these institutions have been hampered by problems ranging from poor manage ment to insufficient funds due to low capitalisation.
Other Financial Institutions and Funds Other financial institutions and funds which perform intermediation functions include the following.
(i) Insurance Companies:
These companies were established to provide insurance cover (life and non-life) to individuals and corporate bodies against risk occurrence. The insurance industry has grown tremendously over the years, with the number of insurance companies standing at 181 by the end of 1997. The Nigerian Reinsurance Corporation was established in 1977 to provide re insurance cover for insurance compa nies. The industry is regulated and supervised by the National Insurance Commission (NAICOM).
(ii) Finance Companies:
Finance compa nies specialise in short-term non-bank financial intermediation such as financ ing Local Purchase Order (LPO), project financing, equipment leasing, and debt factoring. Finance companies became prominent in Nigeria after the 1986 financial sector liberalisation. As at end of 1997, 229 finance companies were in operation.
(iii) Bureau de Change:
These institutions were established to broaden the foreign exchange market and improve accessibility to foreign exchange. They are licensed and regulated by the CBN.
Primary Mortgage Institutions (PMIs):
The enabling law for the establishment and operation of PMIs is Decree No. 53 of 1989. The major function of PMIs is to mobilise savings for the development of the housing sector. PMIs were initial ly supervised by the Federal Mortgage Bank of Nigeria (FMBN) but that func tion has since been transferred to the CBN. PMIs have grown over the years to about 115 in 1997 while their total assets/liabilities stood at 146,078.9 million in the same year.
The National Economic Reconstruc tion Fund (NERFUND):
NERFUND was established under Decree No. 25 of 1988 with the broad objective of providing local and foreign funds to small and medium-scale enterprises. The Fund draws its resources from the Federal government, the CBN, African Development Bank and foreign governments that provide fund ing by way of export credits for the. scheme. Cumulative disbursements of N306.8 million and US$80.1 million had been made to projects under the scheme as at the end of 1994.
(vi) Nigerian Social Insurance Trust Find(NSITF):
Established by Decree No. 73 of 1993 to replace the defunct National Provident Fund (NPF), NSITF's main function is to adopt a more com prehensive social security scheme for Nigerian private-sector employees. Underlie scheme, Nigerian private sector employees are expected to con tribute 2.5 per cent of their respective gross monthly income while the employ er is expected to contribute 5 per cent of gross monthly emolument. As at the third quarter of 1995, a total of 25,318 contributors had been registered while estimated savings with NSITF were MI,117.5 million in 1997.