The Nigerian stock market is now more accessible than ever to both Nigerians and non-Nigerians. Over the years, the market has moved from paper-based processes to easy-to-use electronic systems that allow investors to open accounts, trade and monitor their investments online.
Below are 5 simple steps to help you get started with investing in the Nigerian Stock Exchange (NSE).
1. Research and decide on a preferred stockbroker
A stockbroker is an authorised agent that helps you buy and sell shares on your behalf. In the Nigerian market, a stockbroker is a broker-dealer firm that is a dealing member of the Nigerian Stock Exchange and is registered with the Securities and Exchange Commission (SEC).
When choosing a stockbroker, consider the following:
- Ease of access and quality of customer service
- Minimum account opening amount and general affordability
- Integrity, reputation and track record in the market
- Registration status with the NSE and SEC
Always confirm that your chosen stockbroker is properly registered and in good standing before you proceed.
2. Open an account on the CSCS (Central Securities Clearing System)
To participate in the Nigerian stock market, every investor must be registered with the Central Securities Clearing System (CSCS). CSCS is the electronic database that records ownership of securities in Nigeria and works closely with the Exchange.
When you are registered, the system assigns you a unique CSCS account number, which will be used for every trade you carry out on the market.
Account creation on CSCS is done through your chosen stockbroker. Most stockbrokers will update your registration details on their platform and automatically reflect them in the CSCS registry.
To register with a stockbroker, you will typically be required to complete a registration form (online or physical) and provide standard KYC documents such as:
- A valid means of identification (PVC, National ID, Driver’s Licence or International Passport)
- Proof of residential address (utility bill or receipt not older than 3 months)
- Passport photograph
- Electronic signature (for online forms)
For non-Nigerian residents, notarised identification and proof of address are usually required.
3. Fund your account and start trading
Once your account is opened, your stockbroker will provide their bank details so you can fund your trading account. After your funds are confirmed, you can begin placing trade instructions.
Investors only trade on the Exchange through licensed stockbrokers. You can give your instructions using:
- Traditional written order forms (sent by email, fax or courier)
- Online trading platforms provided by your broker
Online platforms are now the most common way to trade on the NSE. However, new or inexperienced investors should be careful to avoid impulsive or uninformed trading. If you are unsure, seek guidance from your stockbroker before placing orders.
For long term investors who do not need to trade frequently, using written trade instructions through the broker can be more suitable.
4. Collect benefits on your investments
There are three main ways investors make money from stocks:
- Dividends
- Capital appreciation (share price increase)
- Bonus shares
Many companies pay a final dividend at the end of the financial year, and some also pay interim dividends during the year. Paying dividends is not compulsory, but when profits allow, companies may choose to reward their shareholders.
In some cases, companies reinvest profits to create additional shares and then issue these as bonus (or scrip) shares to existing shareholders. As a shareholder, you can either keep these bonus shares in your portfolio or sell them to raise cash.
5. ‘Recreate’ or reinvest your returns
When you start receiving returns from your investments, you have a choice. You can use the money for personal goals, such as travel, education or major purchases, or you can reinvest some or all of it back into the market to grow your portfolio further.
The key is to be intentional about your decision. Decide how much you want to enjoy now and how much you want to build for the future.