Cablegate: Ambassador Visits Nigerian Stock Exchange

This record is a partial extract of the original cable. The full text of the original cable is not available.

261030Z Nov 04




E.O. 12958:N/A

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.


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


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