The Villager Editorial: Is the stock market a preserve of the affluent?

February 8, 2015, 8:13pm

Is the stock market a preserve of the affluent?

Namibia has made tremendous strides in instituting development programmes for the betterment of her people. The country has done exceptionally well in preserving peace and stability and has become a model of a mature democracy.

This is a feat that cannot be associated with many other African countries who have been ravaged by poverty, corruption and a skewed distribution of resources among the citizenry. This notion must not be equated to say that Namibia does not have a bother from the above mentioned. The major challenge though for Namibia has been the failure by a good number of the previously disadvantaged populace to penetrate some of the most lucrative sectors of the economy. These include banking, mining, stock markets and even manufacturing.

One such area of the economy where the ordinary Namibian has failed to cash in is the Namibian Stock Exchange (NSX). Statistics on record show that the bulk of the trading that takes place at the NSX has been dominated by either institutionalized trading or in many cases it is the affluent and privileged businessman who has had an understanding of the equities counter who buys shares. Certainly it should not be the case because it is not rocket science to invest in shares as long there are stock broking firms to assist.

While stock market trading is by nature not a guaranteed environment for investment it is one of those were locals can also invest their money and expect reasonable rewards especially with a stable economy.

In some countries the middle class make quite a lot of money by trading in shares. The challenge though is that the NSX has not done enough to sensitize the public about the happenings of the equities counter. Perhaps there is a need for the equities market to stretch their hand even to high schools to nurture the public about the operations of the stock market.

At some point the idea of the NSX targeting schools to sensitize the public about their existence was very vocal, however one wonders what killed that noble idea?

 Perhaps it is not only the NSX that has not done enough as a few of the counters trading on the NSX could also avail small resources to fund public sensitization.

 While it takes money for anyone to trade on the stock exchange it is not necessarily that much money that an average Namibian would not afford. Last year Namibians showed that they have interest in such investments when the availed shares of Bank Windhoek were oversubscribed.

If Bank Windhoek could arouse such a major interest from Namibians within a short period imagine the amount of interest Namibians would have in share trades if they really knew more about it. The regulator of the industry and government could also find ways of opening up such closed chapters of the economy to the average Namibian for better participation in the future.

While such an exercise will not come cheap it will certainly go a long way in educating the public about the significance of a stock market in the economy. It might actually open their eyes to some of the hidden opportunities that they could have accessed.

Statistics at hand show that the country’s stock market saw about N$8billion changing hands as at the conclusion of business in 2014. In actual fact the statistics show that in December last year, a total of N$8 billion worth of shares had been traded in terms of value, with a total volume of 164 million shares traded in volume.

NSX findings also show that financial counters dominated the highest number of deals with a total of 2753 deals recorded during the period under review while basic materials counters came second with 495 deals closely followed by consumer services with 406 deals.