KASIMU GARBA KURFI is the Managing Director / Chief Executive Officer (CEO) of APT Securities and Funds Limited.
Kasimu started his career as an Accountant with the Ministry of Finance, Katsina, from where he was deployed to the State Ministry of Education.
He was a Council Member of the Nigerian Stock Exchange, a Fellow Member of the Institute of Chartered Accountants of Nigeria (FCA) and a Fellow of Chartered Institute of Stockbrokers (FCS).
He is also an authorised Dealing Clerk of the Nigerian Stock Exchange. His working experience spans over twenty years (20) covering the public sector, oil and gas, financial services / stockbroking industry.
Kasimu spoke with MoneyCentral last week about retail participation in the Nigerian stock market, APT Securities growth plans, ongoing Pension reforms, the role of financial services in growing Nigeria’s economy and improving access to capital.
This interview has been edited for length and clarity.
How has APT Securities managed to survive and thrive in this climate that we are in?
We acquired this company from the owners in 2002 and we acquired it because they were unable to meet up with the capitalization of N20 million that was the minimum capitalization as far back as 1989.
We acquired it from the owner at less than N5 million then we capitalized it to N25million to meet up the N20 million and today we are worth over N6 billion because of the focus we had from the day one we said let us start this and we mean business.
We have always seen the wisdom of the pension reforms, so we also applied for a license but unfortunately we were not able to get the license during the first batch but during the time they were issuing the last one we were able to get a license, so APT has an APT pension fund.
APT today you can trade with your phone you do not need to have an iPad, desktop or laptop all you have to do if you are android compliant you go to your Google, wherever you will see APT that is our trading platform so with your phone wherever you are, we have people trading across the country and outside the country so these are the major areas of focus, that gave us an edge over others.
How do we get more retail participation in our stock markets?
You see, for decades, institutional investors, particularly the foreign investors had taken over our market, up to 2017, go and see 55% of our volume transacted is by the foreign investors, but from 2018 till date, the retail has taken that position, as per today I’m talking to you, over 60 percent of the market is by retail.
The reason is very obvious, you cannot have foreign investors until you have a flexible foreign exchange because they do not come with naira, they bring hard currencies and when they bring it, they want to also exchange it and get out of it, you know, the opening of the import-export window attracted them more but they could not continue, why?
That is because of the Covid-19 crises and the decline of the crude oil price which affected the in-flow of the foreign exchange CBN had no choice than to start coming with some other guidelines which put more restriction to the foreign investors to play the market, and now the local investors have taken the lead.
I remember in 2020, in the last quarter of the year, all share index gain 50% which we have not experienced in the last 50 years, not only that, in the history of Nigeria stock exchange, we have never had a quarter gain of 50% while some individual stocks gained more than 100%, so whoever played the market last year, had something good.
I know many stocks that gained more than 100% last year. Nigerian breweries is one of them, as at April it was trading N22, before the year end, it was trading more than N50, that is more than 100%, Dangote cement was trading at N117, before the year end, it moved over to N245 and N245 is more than 100% , a big company like Dangote, also Airtel trading N300 before you know it moved to N900 so we have many really cheap companies that have moved there, everybody knows what CCNN is Cement Company of Northern Nigeria a whole sector name, which changed its name to BUA before the year ran out it began trading with N70 this was the stock that years back we were trading it for 4-5 naira so anybody that have BUA had to laugh because you have gained 300% last year so this attracted the local investors, retails in particular to come into this market and start playing it and today as I am talking to you retail investors are the major players.
This is because for us with a little money, you can open an account, ten thousand naira is enough to open an account and start trading even by yourself online.
The NGX is set to introduce some exciting new products like stock equity futures. How are you positioning to trade this new product and educate your clients on them?
We are among those that applied for the derivatives product and APT is planning to come out in a big way.
My clients are more from the North and they often want a product which today, the typical fund manager has not provided and that product, a typical northerner will tell you that he or she does not want to deal with any company that deals with interest, banking, insurance and breweries.
I trust my people, most of them will give you the money and say don’t buy this., so if you have a fund manager that can take care of all their needs, they will go with it.
APT security, how does it stand out, what is so special about APT security?
What makes us special is our branch network, today we are comparable to none in the whole stock broking industry; no stock broking firm has as many branches as we have and that gives us an edge. We have branches that have been established for over 15 years and successful so all the hitches and difficulties of running the branch we have overcome them and now we can boldly say that gives us an edge over our competitors because most of them concentrate in Lagos and we do not rely only on the branches, we have the mobile app, today, we are among the very few stock broking firms which you can download our mobile app and trade from anywhere; and that also gives us an edge.
What are your major areas of specialization that provide value for your clients?
We can only say we specialize in retail because retail does not need big money, some of our colleagues will say they need N50 million to open an account.
Some will say N10 million; others will ask you for N1 million to open an account.
This is what gives us an edge over the rest, because we offer a lower entry amount that customers can afford and we have an application that can take care of them, they can trade from anywhere and register from anywhere online without coming to the office.
How can we get pension funds to invest more in the stock market?
Already pension firms are investing more in the market and you have seen it all, from January till date, pension firms have doubled their investment in equities and they have no choice because initially, they ran into federal government bonds.
I remember three years back, Treasury Bills were trading up to 15-19% but today the best you can get is 5% or at most 6%, that is a total of 5-6% when the inflation is about 18% so you invest in treasury bills yielding 6% and have a negative return of 12%; nobody would do that.
Remember in equities, you can get up to 10% appreciation in stock price and today as I am talking to you, many stocks have gotten more than 20-30% despite that our market closed negative so that shows you the resilience of equities, coupled with the juicy dividend yields.
We have stocks that their dividend yields are more than 13% so why should you go and invest in an asset class that gives you 6-10% when ordinarily with price appreciation and dividend yield, you will get 13% with equities.
Take a stock like zenith, they pay N3 dividend and they are trading around N25, when you take N3 over N25, that will give you about 13% yield.
As a Director in APT pension fund managers, what is your take on the new regulation by “PENCOM” that every player in the industry should raise their minimum capital requirement?
You see this is not the first time if you can remember pension fund started with N150 million and when they started it was in 2004, by 2011 they moved to N1 billion and that is more than six times and no other industry has ever done that, you move the capitalization not by 100%,200%,300%,400 %, but by 600%.
All the Pension Funds were able to meet up, that shows capitalization is not an issue because today if you want to apply for a Pension Fund license, you will be given but the reason why people do not apply is because it is a race that those that are ahead of you are ahead of you and you cannot catch up.
So the best you can do is acquire.
I can assure you by the end of the deadline you will see quite a number of them will meet up because to start a Pension Fund and get to the level where they are, you will need more than five billion so if they cannot they will offer it to others.
I know one of the Pension Funds, I will not mention the name, they are selling their shares right issues at N25 per share, N1 share is being sold at N25 and I can assure you it will be fully subscribed so that will tell you where Pension Funds are.
I am not surprised because they deserve it, this is an institution that controls N12.5 trillion and they are not more than 20, so they can meet up, yes it is a big challenge but they have seen it before and they overcame it so seeing it now would not make any difference and will probably help some to merge.
As a major player in Financial Advisory what is your deal book telling you about the state of the Nigerian economy especially with regards to Capital raising, Mergers and Acquisitions? Are firms beginning to see green shoots in the economy and taking on more risks and deals?
When you look at our economy, it’s a big challenge in the sense that today we live in debt, for the last five years all our budgets have been in deficit and not N1 trillion or N2 trillion, the projected budget of 2022 is forecasting more than N5.5 trillion deficits.
The minister of finance said that from January till May, 94% of revenue generated has been used to service debt so if you use 94% of your income to service debt, what is left of your income? What is left of people’s salary? What is left for you to do the capital projects?
you need to borrow.
This is the situation we find ourselves and until Nigeria’s economy is fully diversified, we have to continue working towards that end, my prayers and wishes and hope for the government, let whatever they borrow, put it in the country’s capital expenditure because today if you have a railway line that could move from Lagos to Ibadan sixteen times a day, many people would abandon the houses that are very expensive and go to Ibadan to get the houses that are cheap and use the difference is that over there the cost of living is less, cost of food is less, cost of education is less and so it will reduce the heavy concentration in Lagos where everything is high and it is good for the economy.
Today a basket of tomatoes in the North during harvest period doesn’t cost more than N350-N500, that you can buy here as much as N7000, if there are good infrastructure it will reduce the gap so those who are producing it will find it easy to transport it and because they find it easier in transporting it through rail you will find it cheaper and it is a win-win situation for everybody instead of putting 70% of your money for food you will put 20% and save the rest so I see the economy getting better because we see the infrastructure are been addressed and we hope they will continue, we hope they will finish the second Niger bridge timely and all these railways to the East, North, South will be completed timely and if they do that, the economy will be better, we have the potential.
How can the financial services sector contribute more to the economic growth and innovation in Nigeria?
Financial services are a power to reckon with and no economy will move without them, remember in the old days, in the 90’s if you want N5 billion you will have to gather five banks but today a bank can give you N100 billion loan without looking at other banks because most of their assets are running into trillions.
I know of a bank that has N5 trillion in assets, so what is 5% of your money so if you have five trillion and you take 5% that can be running into billions so they are in the position and capacity to give you loans and the more they lend you the better for the economy.
Some parts of the country are further behind in terms of access to capital markets whether for corporates or individuals. How do we bridge this gap?
I think we are shrinking it by this anchor borrowers programme that the, CBN is coming out with, that extends loans to even rural areas and by so doing, people will be richer and when you get richer you have no choice than to look for financial institutions and the banks, wherever there is money they will be there.
It is just like telecoms, there is no remote area you will go where you would need to get a network that you won’t see the telecoms go there. The government did not order them, it is the economy and today they are contributing about 15 percent of the GDP which in the 90’s they did not contribute up to 5 percent.
What is the next big thing for APT securities in terms of your growth plans?
We don’t want to restrict ourselves to securities trading, we want to go into all other currency trading and as for crypto currency I can tell you if it is regulated we will be there, this is very necessary for us so once you diversity the sky will not be your limit even the dividend I receive from my subsidiary is enough to cover my cost so you can see that it is good to diversify and we are prepared for that.