An investment bank, Standard Bank Plc, has said that the recent policy of the Central Bank of Nigeria (CBN) in the domestic economy, has contributed largely to the low appetite of both local and institutional investors for stocks purchase.

The bank said that the surge in Treasury bill rates especially in 2011, and amidst significant monetary policy tightening by the apex bank curtailed domestic investment in shares.

According to a report from the bank obtained by the Nigerian Tribune and titled 1-January 2012, the bank said that increased risk aversion in 2011 had not been conducive for the Nigerian Stock Exchange (NSE) as foreign investors reduced their exposure to frontier market equities.

It added that “Additionally, continued upward pressure on the dollar/naira, loose fiscal metrics and the slow pace of reforms have also deterred foreign participation, even despite attractive valuations.”

The report explained that “the woes in the Nigerian financial system have been broadly addressed, with AMCON acquiring banks’ non- performing loans, and when necessary, taking direct control of some institutions,” it added.

Meanwhile, the Managing Director of Partnership Investment Limited, Mr Victor Ogiemwonyi, laid the colossal loss in value on the Nigerian capital market at the doorsteps of the Central Bank of Nigeria (CBN) as its N100billion capital base for local banks which seek to  manage part of nation’s foreign reserves resulted in deep erosion of the market value.

According to Ogiemwonyi, the imposition of the huge capital requirement caused a mad rush for fund raising at the market and figures were indiscriminately churned out since all the banks wanted to play big.

“The process was distorted. Everybody was trying to get the numbers. If you asked bank managers to give you figures, they would manufacture different ones. Issues that would ordinary take six months to conclude lasted a whole year because CBN said they were doing capital verification. With the benefit of hindsight, we now know that the capital was not there. The capital verifications brought a lot of manipulations,” he said.