In response to new minimum capital requirements, a number of Nigerian banks turned to the local equity market to raise funds. Despite initial fears that the market was not deep enough to absorb the surge in issuance, investors turned out in force. In 2005 alone, banks raised N517.6bn ($4bn), representing 17.8% of the year-end market capitalisation of the Nigerian Stock Exchange (NSE). And without pausing for a breath, Zenith Bank went back to the market in January with a N50bn public offer, which is the biggest in Nigeria’s history. As The Banker went to press, the offer was expected to be oversubscribed.
However, despite the apparent vigour of the NSE, the country’s capital markets are severely underdeveloped. The exchange, which includes bond listings, is no exception. At the end of 2005, the NSE’s market capitalisation was $22.5bn, less than a quarter of gross domestic product (GDP).
