US embassy cable - 04LAGOS2374

UNCLAS LAGOS 002374 
 
SIPDIS 
 
SENSITIVE BUT UNCLASSIFIED 
 
E.O. 12958:N/A 
TAGS: EFIN, ECON, EINV, NI 
SUBJECT: AMBASSADOR VISITS NIGERIAN STOCK EXCHANGE 
 
 
1. (U) Ambassador John Campbell visited the Nigerian 
Stock Exchange (NSE) in late October.  The program 
included remarks by NSE management, the Ambassador's 
ringing of the closing bell, brief question and answers 
with the press, lunch with NSE management and traders, 
and interaction with principal stock traders. 
 
2. (U) The NSE is one of Africa's leading securities 
exchanges with one of the best rates of return on 
investment in the world, according to NSE Director 
General Dr. Ndi Onyiuke.  The market has risen 
approximately 40 percent in annualized terms over the 
last four years.  The all-share index has grown from 
100 in 1984 to an all-time high of 26,000 in 2004.  It 
is at just over 22,000 at present. 
 
3. (U) Industry watchers predict further growth over 
the next few years, given the introduction of new 
derivative instruments, pension reform, and the 
reactivation of the corporate and government bond 
market in Nigeria.  The NSE has a relatively strong 
regulatory capacity within the Nigerian context and is 
a signatory to the World Federation of Exchanges 
international code on money laundering.  The exchange 
sponsors several international investment road shows to 
the United States and Europe each year in an effort to 
attract investment from the Nigerian diaspora and from 
international fund managers.  The NSE reports Americans 
hold USD 300 million worth of shares on the exchange. 
 
4. (U) Dr. Ndi Onyiuke stressed the importance of 
integrity and transparency in the NSE's activities. 
The NSE has rigorous standards to prevent and detect 
fraud, she asserted during her conversation with 
Ambassador Campbell.  The public's trust in the 
exchange has been central to its success. Ndi Onyiuke 
acknowledged that corruption and fraud are problems in 
Nigeria.  However, she maintained that only a small 
number of individuals committed these criminal 
activities, which unfortunately give the entire country 
a black eye.  Ndi Onyiuke hopes the NSE will serve as 
an exemplar of how businesses and government 
institutions can operate in Nigeria. 
 
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Comment 
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5. (SBU) Ambassador and Consulate Staff visited the NSE 
the day after Transparency International (TI) released 
its Corruption Perceptions Index 2004, ranking Nigeria 
as the third most corrupt country in the world, a 
marginal improvement over 2003 when Nigeria was ranked 
number two.  The ranking appeared to weigh heavily on 
Ndi Onyiuke who went to great lengths in her discussion 
with the Ambassador to differentiate the NSE from 
corrupt individuals and institutions in Nigeria.  Most 
reports we hear about the exchange are favorable and 
indicate that Ndi Onyiuke and her predecessors have 
been largely successful insulating the exchange from 
large-scale fraud and unscrupulous business practices. 
Clearly, however, the NSE is handicapped by the global 
image of Nigeria as a country long on corruption and 
short on transparency.  The NSE stands as one of the 
few in Nigeria that plays by the rules of the market. 
In doing so and doing so successfully, it demonstrates 
to Nigeria that fair practice and profit are not 
antagonists.  This is a lesson Nigeria needs and we 
should encourage and support the NSE to the extent 
possible. 
 
CAMPBELL