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PROJECT TOPIC: PUBLIC AWARENESS CREATION ON INVESTMENT OPPORTUNITY IN THE NIGERIAN CAPITAL MARKET (A STUDY OF NIGERIAN STOCK EXCHANGE

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CHAPTER ONE

INTRODUCTION

1.1  BACKGROUND OF THE STUDY

The process of economic development involves the accumulation of capital, which implies that a country must have both thrift and investment outlets. It is highly desirable that there should be a minimum mechanism for transferring of saving into the hands of those persons or institutions that their willingness and ability to put them into productive use, for betterment of the country. The concept of business development vis-à-vis capital market is a highly sophisticated issue through investing in the stock market is a beneficial issue. Some people have to be enlightened about what is going on at the floor of the Nigeria stock exchange and how profitable it is to invest in shares of companies quoted in Nigerian stock exchange. Given the importance of investment generally and the benefit derivable from investing in shares of quoted companies, it thus seems necessary to study and determine the proportion of the population who have invested or have knowledge about investment in the relevant institution.

The Nigerian stock exchange (formally the Lagos stock exchange) according to Nwankwo, (1980) was incorporated in 1960, as a company limited by guarantee with head office in Lagos. It now has branches or trading floors in Uyo, Kaduna, Port Harcourt, Onitisha and Ibadan (Oron Soge, 2007). Stock exchange is a common feature of most active economies in developed and developing countries.

It is the platform for mobilizing funds from investors and channeling same to every sector of the economy through quoted companies for industrializations and sustainable economics development.

In Nigeria the stock exchange has existed for 47 years. A review of the entire financial service sector, revealed that the stock exchange has performed outstandingly, with strength of consistency, vibrancy, transparency and it is gradually being transformed to complete, favourably with u8 other developed stock exchange such as those in New York, Tokyo, London.

The Nigerian stock exchange is rated among the best performing stock markets in the world in terms of dividend yields and returns on investment (Eken, 1982) over the years shareholder have reaped bountifully in the market from the returns on investment, comprising shares price appreciation, dividends, bonuses and rights issues. It promises a rewarding investment and is certainly much more attractive compared to the opportunity cost of other investment outlay. But public awareness among the people of Akwa Ibom State, of investment opportunities in the Nigerian stock exchange is very limited.

1.1  STATEMENT OF THE PROBLEM

Before the establishment of the stock exchange in Uyo, the people of Akwa Ibom State have been lacking behind in the stock market. This was perhaps associated with lack of awareness about how to buy shares and the distance from Akwa Ibom State to Lagos or Port Harcourt stock exchange branches.

Now that the branch of the stock market is in Uyo, it is proper to investigate the level of awareness of the people who have knowledge of investment opportunities in the Nigerian stock market and its subsequent returns.

But there are some problems associated with the types of investment one would want to invest on. They also include the risk of losing one’s investment in the stock market, which stock should an investor choose and whom to contact. Hence, the problem this research work seeks to examine is to determine the level of awareness among Akwa Ibom State people about the investment opportunities in the Nigerian stock exchange with a view to taking advantage of such opportunities.

1.2  OBJECTIVE OF THE STUDY

The main objectives of the study are;

i.            To examine the level of awareness of Akwa Ibomites of opportunities in the capital.

ii.           To examine the importance of creating public awareness on investment opportunities in the Nigeria capital market.

iii.         To examine the problems associated with awareness creation about investment opportunities in the stock exchange.

iv.         To recommend measures for successful awareness creation which will enable of the people of the state to take advantage of such opportunities.

1.3  RESEARCH QUESTIONS

       The following research questions are drawn to guide       this study

(i)    To what extent are Akwa Ibom people aware of the existence of stock and shares as profitable investment outlet through which they can increase their wealth?

(ii)   How relevant is the stock exchange as an important source of investment and wealth creation to the citizens of Akwa Ibom State.

(ii)   What are the problems associated with awareness             creation about investment opportunities offered by   stock exchange to the people of Akwa Ibom State?

(iii)  What measures would you suggest as strategies for    creating public awareness on investment opportunities        in Nigeria Capital Market?

1.4     SIGNIFICANCE OF THE STUDY

The significance of this work lies in the following areas:

(i)                 It will create awareness to Akwa Ibom People of opportunities to increase their wealth through trading in stock exchange market.

(ii)               It will give us an idea of the amount of wealth created by companies In Akwa Ibom people by way dividends, script issues and right issues.

(iii)             The result of this study will, enable the people to appreciate the importance of stock exchange and take advantage of the investment opportunities they offer.

(iv)             The study will also be beneficial to the student of business and accounting on the level of participation of Akwa Ibom people in the capital market. It is expected to add to existing stock of knowledge through awareness creation.

1.5     THE SCOPE AND LIMITATION OF THE STUDY

This study is focused on public awareness creation on investment opportunities in the Nigerian capital market using Nigerian stock exchange, Uyo as case study. Thus, this study will examine the benefits and problems associated with, investing in Nigerian capital market.  

The major limitations to this research work include; inadequate time and limited financial resources. For instance, given the time limit with which to complete this work, time then becomes a major constraint. Also since this work relies heavily on questionnaire instrument as a major primary data collection instrument, the ills or short comings of questionnaire instrument cannot be isolated in this study.

1.6     OPERATIONAL DEFINITION OF TERMS        

SECURITY:    These are income yielding financial instrument signifying a buyers legal claim, and holding in a specific property. Investment involves putting money into bonds common stock, printing and real estate. It also involves security in stock market selling.

SHORT TERM SECURITIES: These are short-term interest bearing financial instruments usually with low risk and maturity bills, treasury certificates, commercial papers and bankers acceptance.

LONG-TERM SECURITIES: These are securities with maturity period of more than one year, and are obtainedable from capital market. They include debentures, bonds, bank stocks, ordinary and perpetuity, which stock and bonds mature after a specific period.

DEBENTURE: Debenture is a document which acknowledge a loan generally given under the company’s seal, bearing a fixed rate of interest.

SHARES: This refers to the securities representing ownership in a business concern.

STOCK EXCHANGE: This is an organized market whereby sellers and buyers issue and sell securities such as stock.

LISTED SECURITIES: These are securities traded on recognized stock exchange.

GROWING STOCK: These are shares of companies whose earning grows of relatively fast rate. Shares of such companies are usually period oriented with above par value and investors benefit through capital application.

STOCK AND BANDS: Stock can be defined as the bundle of shares of mass of capital which can be transferred in fractional amount. Bond is a security issued by a government or its agency or private institution as a means of raising fund. They are long fixed interest bearing securities issued by government and corporate bodies. They include promissory notes, which the issuer obligated himself to the principal amount and interest at specified time and interval.

CAPITAL MARKET: Capital is a type of financial market, it includes the stocks and market as well. It is the market for securities where either companies or the government can raise long term funds. One way that the companies or the government raise these long term fund is through issuing bonds, which is where a person buys the bond for a set price and allows the government or company to borrow their money for a certain time period but they are promised a higher return for allowing them to borrow the money, the higher return is paid through interest that accrues on the money (Adebiy 2005).


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