How To Easily Buy Shares in Nigeria: All You Need To Know
Are you looking for how to buy shares in Nigeria but you don’t know how to go about it? if your answer is yes, then you are at the right place as we will be walking you through everything you need to know about buying shares in Nigeria, so keep reading.
Buying of shares in Nigeria is the responsibility of Stock Brokers as they are licensed by the Nigerian Stock Exchange (NSE) to do so. Therefore you need to decide on the type of shares you want to buy before you choose a broker.
You can only share directly from a company when they advertise that they are selling shares Like the MTN Shares which were advertised by the company in 2021.
However, any method you choose you will be required to go through a stockbroker to handle all the transactions for you.
The Stock Brokers will handle the trading of your shares at a certain fee as well as a commission. The fees are calculated using a standardized sliding scale and are the same across all brokers.
Before going further, let’s understand what Shares are all about:
What Are Shares?
Shares simply represent a certain percentage of stake in the ownership of a company or corporation whose shares you purchase. When you own shares, you own a fraction of the company and be entitled to assets and earnings, depending on the type of shares you hold.
All shares that are held by external investors are referred to as outstanding shares. For instance, Company ABC has 500,000 outstanding shares and you own 50,000 shares. This means that you own 10% of the stake in Company ABC.
How To Open A Nigerian Brokerage Trading Account
A brokerage Trading Account is an electronic account that you must open as directed by the Central Securities Clearing System (CSCS). To open the account, your broker will provide you with the CSCS account opening form and you will be assigned a CSCS account number. This account number will be on every stock or shares you trade therefore the CSCS can track the record of all your holdings.
Documents required to fill the form include:
A valid form of identification can be any Government-issued ID with a number on it. You can use your international passport, Driver’s License, or National ID card for this purpose.
Two coloured passport photographs of yourself
A photocopy of a recent utility bill. This is required for verification of your physical address or residence. You can make use of your electricity or water bill dated within the immediate past three months.
After filling out the CSCS form you will be required to submit the form along with the account opening form, a copy of an ID, your passport photograph, and a copy of your utility bill to your broker. This can be sent initially via email but you must send the original documents later. This should be sent using registered mail as they are safer and more reliable than the traditional postal service.
Getting To Fund Your Brokerage Account
After you have opened a trading account, your broker will give you the details of the account and you can fund the account. You can do this easily via wire transfer.
Submitting A Trade Offer
You should carry out research before deciding on which shares to buy. This stage involves laying out a set of instructions to your broker letting them know the type and number of shares you want them to purchase for you.
An important point to note is that the shares on the Nigerian Stock market are illiquid, therefore you should set a price limit for any share you wish to buy so you don’t end up paying more.
Once this is achieved, your broker will send you a contract note in which you have details on the shares bought, the selling price, the commission as well as the fees charged.