Chinwendu Obienyi
For many years, Nigeria has been undergoing a structural transformation characterised by growth in terms of population and an increasingly diversified economic base.
However, Africa’s largest economy and most populous nation has seen challenges brought about by infrastructural deficit, financial inclusion, investor’ confidence and protection not being effectively addressed.
Within the last ten years however, the Nigerian capital market has grown in leaps and bound and this is due to the work done by the Securities and Exchange Securities (SEC) and the Nigerian Stock Exchange (NSE).
Boosting investor’ confidence through world class regulation and enforcement, strengthening market institutions, promoting corporate governance, supporting innovative technology have been at the forefront of the apex regulator’s drive towards developing a world class capital market. This has had remarkable impact as market liquidity is improving together with the addition of alternative trading platforms and creating enabling environment supportive of products like Securities lending, Exchange Traded Funds (ETFs), Sukuk, Mutual Funds.
Notwithstanding the progress the market has achieved so far, the country is not where it should be and to attain the status of a world class capital market, a lot still needs to be done.
The SEC, clearly impressed with the strategies Malaysia used in developing its own Islamic capital market centre, made plans of their own to embark on covering the overall capital market, non-interest financial products and capital market literacy through the Nigerian Capital Market Master Plan (CMMP: 2015-2025)under the leadership of Arunma Oteh in 2014.
According to her, “Movement to build a world class capital market will enable our country actualise its fullest potential and attain socio-economic upliftment we all desire”.
CMMP so far
Although the implementation of the plan has been slow due to the macroeconomic challenges of the country, the Commission’s efforts have been recognised in various initiatives it had embarked on. These initiatives include recapitalisation, Direct Cash Settlement, e-Dividend, National Investors Protection Fund (NIPF), and Corporate Governance Scorecard, among others.
However, following the suspension of Mournir Gwarzo, the Mary Uduk-led management continued to promote the initiatives while raising the bar on the NIPF Risk-Based supervision and the Complaints Management Framework that opens communication channels for investors to lodge complaints and get prompt responses.
Furthermore, the Commission engaged the Nigeria Inter-Bank Settlement System (NIBSS) on behalf of the capital market community to facilitate identity validation and account validation in an effort to enhance market processes. The partnership has yielded into 2.7 million accounts mandated and 3.4 billion units of shares regularised shares under the E-DMMS and multiple subscriptions.
The Commission has also embarked on sundry initiatives to protect the public from fraudulent or scam investment promoters while issuing several warning notes,urging the investing public to refrain from investing their money in outfits not registered with the SEC.
Also, the capital market regulatory institution initiated a collaborative relationship with the Nigerian Educational Research and Development Council (NERDC) on the development of a curriculum for basic and secondary schools on Capital Market studies. Progress is said to have been made in reviving activity in Mutual funds as the Commission recently said it expects a N1.5 trillion growth in that segment of the capital market before the end of the year.
New leadership
Although Uduk and her team ensured that the market was well regulated, many stakeholders believe their efforts did not yield the desired results because their functioning in acting capacity limited the amount of reform they could drive in the market.
This development, they said, affected investors’ patronage of the market in spite of huge opportunities. However, the appointment of Lamido Yuguda as the substantive Director-General with other commissioners, has been commened as a positive development that would help to position the market for post-COVID-19 recovery.
Speaking during his assumption of duty alongside the Executive Commissioners in Abuja recently, Yuguda, said, the continued implementation of the ten-year CMMP will be one of the major focus of the new management.
He ascertained that while the new management team at SEC also seeks possible ways of strengthening the master plan for enhanced impact, the members will equally work towards improved market regulation, surveillance and general development.
“In order to do this effectively, we will need to develop relevant capacities. This we shall do by first learning from existing internal efforts and also from other available innovative approaches. We would also foster collaboration with relevant stakeholders, be it private, public or international in achieving our mandates”
We want to assure investors that this market is for them and we are ready to do everything to ensure that we increase investor enlightenment through education, robust regulation and fair dealing. For those that want to defraud investors, there would be no respite because we are ready to fight market manipulation to the last, anyone that flouts our rules will be made to face the consequences of their actions.” he said.
Stakeholders react
Reacting to the words of the new SEC DG, National Coordinator, Progressive Shareholders Association of Nigeria, Boniface Okezie, said, the entire market structure is in dire need of repositioning. His words, “The SEC currently needs repositioning and all stakeholders need to be brought together because as it is today SEC is divided and so a formidable force was expected to be brought in to re-organise the commission and make them understand what the commission stands for. Without SEC, you cannot talk about the capital market and so there is need to amend the laws as well as review the master plan for the market.
There is a need to reposition the capital market for the growth of the economy because this pandemic has worsened things with several companies groaning over huge taxes and so everything needs to be done fast to reposition the capital market”.
Commenting further, the Chairman, Association of Securities Dealing Houses of Nigeria (ASHON), Chief Onyenwechukwu Ezeagu said, there is a compelling need for revisiting the CMMP and urged the commission to remain true to their words of engaging market stakeholders.
“They should revisit and rejig the master plan and be focused on the mandate to make the Nigerian capital market to be best in class, deep, resilient and capable of inspiring and sustaining confidence among all investors both locally and internationally”, Ezeagu said.