Many Nigerians still don’t fully understand how the stock market works in Nigeria, especially why you need another buyer before selling your shares. This confusion has made many people afraid of investing in Nigerian stocks. But the truth is, the Nigerian stock market works like a marketplace where buyers and sellers exchange ownership daily. In this post, I will break it down in the simplest way possible using relatable storytelling examples that even Mama Ngozi that sells tomatoes in the village will understand.
When you buy shares in a company…
WHO ACTUALLY HOLDS YOUR MONEY?
Yesterday, somebody asked me a very powerful question.
And honestly…
this is one of the smartest questions I’ve seen many beginners ask about the stock market.
The person said:
“Iking, If I use money to buy stock, why is it that when I need my money back, the company will ask me to look for another buyer? Why won’t the company just return my money directly?”
Nwunnem…
This question is DEEP.
Very deep.
Because once you understand this one thing, your entire mindset about the stock market will change forever.
Now calm down.
As your Financial Literacy Advocate..
Let me explain this in the simplest way possible.
Imagine Mama Ngozi that sells tomatoes in the village.
One day, Mama Ngozi decides to expand her tomato business.
But she doesn’t have enough money.
So she tells 10 people in the village:
“Bring money. Let us grow this tomato business together.”
Now let’s assume:
Each person contributes ₦10,000.
That gives Mama Ngozi ₦100,000 total capital.
Now here is the important part many people don’t understand:
That ₦100,000 is no longer sitting inside one safe box waiting for people to come back and collect it.
No.
Mama Ngozi has already USED the money.
She has used it to:
• buy tomatoes
• transport goods
• rent shop
• pay workers
• grow the business
Meaning:
the money has entered BUSINESS OPERATIONS.
Now after one year…
the tomato business grows massively.
More customers.
More profit.
More expansion.
Now because the business has grown, the VALUE of each person’s ownership also increases.
This is exactly how shares work in the Stock Market.
Oya Relax..
Let me go deeper:
When you buy shares in a company, you are not DASHING them money.
You are BUYING OWNERSHIP.
Read that again carefully.
You are buying OWNERSHIP.
Meaning:
you now own a small part of that company.
Now here is where many people get confused.
When you now want to collect your money…
the company is not supposed to stop business operations and start returning everybody’s capital one by one.
Imagine if MTN, Dangote, Zenith Bank or GTBank starts returning money to millions of shareholders every time somebody wants to sell shares.
The business will collapse immediately.
That is why the stock market was created.
The stock market is simply a MARKETPLACE for ownership exchange.
Very simple.
Now let me explain further.
Imagine you bought land in Abuja for ₦2 million.
After some years, the land becomes ₦10 million.
Now when you want to sell it…
Do you go back to the person that sold the land originally and demand your ₦10 million?
No.
You look for another buyer.
Why?
Because the value has changed.
That is exactly how shares work.
Shares are ASSETS.
And assets increase or decrease in value depending on:
• company performance
• profit
• management
• economy
• demand and supply
• investor confidence
Now let me shock you.
Sometimes…
the company itself can buy back shares from investors.
That is what we call “SHARE BUYBACK” in finance.
But normally…
most buying and selling happen between investors themselves inside the stock market.. which is what we called the “Secondary market”
That is why when you want to sell shares, another investor buys it.
Now another thing many people don’t understand is this:
When you buy shares, your money does not disappear.
Your money ONLY changes FORM.
Very important.
Yes.
It changes from CASH to OWNERSHIP.
And…
That ownership now keeps moving in value.
Sometimes up.
Sometimes down.
That is why you hear things like:
“Capital appreciation.”
Meaning:
the value of your ownership increased.
Now as an Investment Strategist and your financial literacy advocate…
Let me even say something deeper.
One of the biggest reasons many Nigerians fear the stock market is because nobody explained it to them properly.
Many people think shares are like keeping money in one secret place.
No.
Shares represent REAL businesses.
Real factories.
Real banks.
Real telecom companies.
Real cement companies.
Real oil companies.
That is why when those businesses grow…
shareholders benefit.
Now listen carefully.
The stock market is not magic.
It is ownership transfer.
And this is one reason why financial literacy is very important.
And that’s why I build Fokona to democratise and localise financial literacy and financial Education in Nigeria and across Africa.
Because when people don’t understand something…
they fear it.
And what people fear…
they avoid.
Now let me tell you something very powerful.
The richest people in the world understand one thing:
OWNERSHIP creates wealth.
Not salary alone.
That is why many wealthy people own:
• shares
• businesses
• real estate
• assets
Because ownership allows your money to work while you sleep.
But, Iking…
does this mean every stock is good?
No.
That is why knowledge matters.
That is why analysis matters.
That is why patience matters.
And that is one of the reasons I keep teaching financial literacy publicly.
Because many Nigerians are intelligent…
they just never had somebody break these things down in simple language.
My name is Iking Ferry,
The Financial Literacy Advocate and Investment Strategist,
On a mission to build 10 million financially free Nigerians and Africans through Fokona with the right knowledge.
