The purpose of this research work is to appraise the role of Capital Market in the privatization of Public Enterprises in Nigeria with the Nigerian Stock Exchange, Lagos as a case study. The following three null hypotheses were formulated through the use of Secondary Data.

However for the analysis of data simple regression analysis was made use of and the result obtained revealed that:

The activities of the Nigerian Stock Exchange have significant relationship to the privatization of public Enterprises. The Nigerian Stock Exchange Markets have significant In Economic development and growth.

The development of Manufacturing Sector was related to the operation of the Nigerian Stock Exchange.

This study had given some suggestion, recommendation based on the findings and which if adhered to are capable of strengthening and improving the role of the Capital Market in the Privatization of Public Enterprises in Nigeria.


Title page





Table of con tents


1.0    Introduction

1.2    Statement of the research problems

1.3    Aims and objectives of the study

1.4    Research question

1.5    Statement of research hypothesis

1.6    Research Methodology

1.7    Significant of hypothesis

1.8    Scopes and limitation of the study

1.9    Definition of terms and concept

1.10  Plan of the study


Literature review

2.1    Introduction

2.2    Definitions and concepts of privatization

2.3    Historical development and growth of the capital market

in Nigeria

2.4    The Nigerian Stock Exchange

2.5    Major operation in the Nigerian Stock Exchange

2.6    Role of the Capital Market in the Privatization of Public


2.7    Steps taken by the Nigerian Stock Exchange in marketing of shares of enterprises for designated Privation


Structural Framework

3.1    Introduction

3.2    Dealing Procedure on Nigerian Stock Exchange

3.3    Stock Exchange and Privatization

3.4    Benefits of the privatization Programme

3.5    Effects of the Privatization Exercise on the Capital Market


Research Methodology and Interpretation of Result

4.1    Introduction

4.2    Data for Regression

4.3    Analysis of Results

4.4    Interpretation of Results

4.5    Summary of Findings And Policy Implications


Summary, Conclusion and Recommendation

5.1    Summary

5.2    Conclusion

5.3    Recommendation





It is a known fact that the investment that promotes economic growth and development requires long term funding, far longer than the duration for which most investors are willing to commit their funds.

Capital market is a collection of financial institutions set- up for the granting of medium and long term loans. It is a Market for government securities, for corporate bonds, for the mobilization and utilization of long term funds for development that is the long termed of the financial system. In this market, Leaders (Investors) provide Long term funds in exchange for long term financial assets offered by borrowers. This market embraces both the new issues (primary) market and secondary market. Such securities might be raised in an organized market such as the Stock Exchange. In this sense, it involves consortium under writing, syndicated loans and project financing.

Thus, it is a mechanism whereby Economic unit desirous to invest their surplus funds, interact directly or through financial intermediaries with those who which to procure funds for their Businesses. In Nigerian context, participant includes Nigerian Stock Exchange, Discount Houses, Development banks, Investment banks, Building Societies, Stock Broking Firms, Insurance and Pension organizations, the government, individuals and the Nigerian Stock Exchange Commission (NSEC)

Though the role of the Capital market in the Privatization of public enterprises has for long been of interest to present time researcher as well as Economics planners .This is so, because, the Capital being as it is plays a vital role in the successful completion of the Privatization programme. Thus, the broad role of the Nigerian Capital market in Privatization will be to serve as platform for the participation of the extremely large numbers of small investors throughout the Country in the distribution of shares of enterprises that will be designated for privatization.

Among such benefit highlighted by the Bureau of Public Enterprises (2000) are that Privatization will bring about, a reduction in Government wasteful spending in the area of running the enterprises, also that strategic Investors/Foreigners will bring their money and new technology into Nigeria to run the Company eventually leading to growth and development of the Nigerian Economy .

The Nigeria Stock Exchange has its branches in Lagos. (1960), Kaduna (1978), Port - Harcourt (1980), Kano (1989), Onitsha Feb. 1990- August 1990; Abuja Area Office, 1990; and Yola (2002); The Lagos Stock Exchange (1960) was transformed on 2nd December 1977 into, the Nigerian Stock Exchange.

Finally, it is therefore the role of the Nigerian Stock Exchange to see to the marketing of these 20% equity shares to the Nigerian Public and to ensure that they are evenly spread among classes and regions of Nigeria acquiring the 20% shares under a conceived communication policies.


The major concern of this research work is to critically appraise the role of capital market (through the Nigerian Stock Exchange, Lagos) in the Privatization of public enterprises. The research work will also examine and provide answers m respect of the following questions;

which activities of the Nigerian Stock Exchange is in relation to the Privatization of Public Enterprises? To what extent has the Nigerian Stock Exchange contribute to Economic development and growth? To what extent has the government development stock rate influenced the rate of stock market capitalization.


The objectives of the study will be summarized below;

i)       Critically appraise the role of Nigerian Stock Exchange in relation to the privatization of public enterprises.

ii)      Determine the extent to which the Nigeria Stock Exchange contributes to Economic development and growth.

iii)     Find out the extent to which the development of capitalization will be related to the operation of the Nigerian Stock Exchange.


Ø What role does Nigerian Stock Exchange play in the privatization of public enterprises? Ø Does Nigeria Stock Exchange contribute to Economic growth and development? Ø What is the relationship between development of capitalization and the operation of the Nigerian Stock Exchange?


In the course of this study, three main hypotheses are formulated

Hypothesis 1:

Ho: That the activities of Nigerian Stock Exchange have no any significant relationship to the privatization of public enterprises.

Ha: That the activities of Nigerian Stock Exchange have significant relationship to the privatization of public enterprises .

Hypothesis 2:

Ho: That the Nigerian Stock Exchange market does not have any significant effect on Economic development and growth.

Ha: That the Nigerian Stock Exchange market has significant effect in Economic development and growth .

Hypothesis 3:

Ho: That the development of manufacturing sector does not relate

to the operation of the Nigerian Stock Exchange.

Ha: That the development of manufacturing sector relate to the operation of the Nigerian Stock Exchange.


1.6.1           The Econometric Analysis will be used to test for the relationship between dependent and independent variables. Data collected from secondary sources and also compiled from publications such as CBN and Statistical bulletin.

1.6.2           Regression Analysis is utilized to measure the impact of Market Capitalization, Share index, Amount Generated from Privatization of Public Enterprises, Eligible Development Stock on Gross Domestic Product in the Nigerian economy from 1981 - 2008. GDP is dependent variable while Market Capitalization, Share index, Amount Generated from Privatization of Public Enterprises, Eligible Development Stock are independent variable.


Gross Domestic Product is the dependent variable, while the independentvariable is Market Capitalization, Share index, Amount Generated from Privatization of Public Enterprises, Eligible Development Stock.

The model expressed as an implicit function will be:

Model 1

From Privatization of Public Enterprises (privpub)

That is share index = f (pripub)

Shareindex = (β0 + (β1 pripub + µ

The model expressed in estimation form will be:

BDP = (βo + β1X1 + µ)




Autonomous (Intercept)



Coefficient of direct investment (X1)



Stochastic or error term

Model 2

Amount Generated From Privatization of Public Enterprises

(privpub) and Gross Domestic Product

That is gdp = f (privpub)

gdp = βo + β1 pripub + µ



Autonomous (Intercept)



Coefficient of direct investment (X1)



Stochastic or error term

Model 3

Market Capitalization (mktcap) and Gross Domestic Product

That is gdp = f (mktcap)

gdp = βo + β1 mktcap + µ


βo      =       Autonomous (Intercept)

β1      =       Coefficient of direct investment (X1)

µ       =       Stochastic or error term

The research methodology is to use secondary data and this will lead to regression analysis to test for the relationship between dependent and independent variables.


This thesis will be useful to Economics and various classes of financial users in various Disciplines. Also this research work will be of great importance to the Nigerian Public, policy maker and to the less developed Countries (LDC) above all, the study as a reference to prospective students who might want to study issues about capital market in Nigeria and will also be useful for developed Countries and international organization if it is look into carefully.


There are various institutions under the capital market, but this study limits itself on the Nigerian Stock Exchange in Lagos. This is so because the Nigerian Stock Exchange Lagos provides, the researcher with the necessary information and materials needed to carry out the study and also because of time availability and financial constraints.

However, the limitation will not affect the validity of the generalizations and conclusions this research work.


In the process of the research work some word will be used and acronyms which might be new to those that might benefit from this work in line with the researcher have defined these words and acronyms as used in one paragraph to the other.

Capital:       Any used for long-term investment or money used to start a business

Capital market:    Is collection of financial institutions set-up for the granting of medium and long-term Loans.

Equity or equities:           According to Oxford dictionary of Economics, equity is the ordinary shares or common stock of companies. The owners of these shares are entitled to the residual profits of companies after all claims of creditors.

Securities:   Securities are written or printed documents by which the claims of holders in specified property are secured.

Investors:    Is a person or an institution that uses his savings or borrowings to buy securities.

Public Enterprises:          According to Akinwade (1992) define public enterprises as the organization, financed and owned by the Federal Government of a Country for the public interest.

Role: Chamber (1999) puts role as a function or part played by someone or something in life, business e.t.c

Shares: Haisan J.L [1977] defined shares as the capital of a limited company                         divided into smaller units.

Stocks: Joyce M.H [1993] defined stock as the capital of a business company                               divided into shares

Ad- hoc:     Latin word, happening that occur when necessary but not plan for that is in advanced.  Jobbers or market makers: are contrasted with brokers, who operate in the same market, but put people who want to buy and sell in touch with each other, and do not trade for themselves.


For proper presentation the study this study is divided into five chapters.

Chapter one deals with the background of the study, statement of the problems, aim and objectives of the study, statement of hypotheses, research methodology, significance of the study, scope and limitation of the study, review of relevant literature, definition of terms and concept.

Chapter two is on the relevant Literature review of the study.

Chapter three contains the structural composition of the study.

Chapter four contains the presentation and data analysis.

Finally, the fifth chapter deals with the summary, conclusion, recommendations and area for further study.

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How To Write Chapter Three Of Your Research Project (Research Methodology)

  • Methodology In Research Paper

    Chapter three of the research project or the research methodology is another significant part of the research project writing. In developing the chapter three of the research project, you state the purpose of research, research method you wish to adopt, the instruments to be used, where you will collect your data, types of data collection, and how you collected it.

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