SEC moves to consolidate market reforms

The Securities and Exchange Commission (SEC) headed by its director-general, Mounir Gwarzo, is moving ahead with vital reforms necessary for the development of the nation’s capital market and the economy, with a series of programmes set to take place this week on the sidelines of the Capital Market Committee (CMC) meeting in Lagos.

The main events are inauguration of the Capital Market Master Plan Implementation Council (CAMMIC), launching of the National Investor Protection Fund (NIPF) and inauguration of its board, as well as the unveiling of the SEC Corporate Governance Scorecard for public companies.

Sources at the Commission revealed that the programmes set to be unveiled this week, are all directly linked to the 10-year capital market master plan which SEC began implementing this year.

Gwarzo, the SEC director-general , who heads the leading market regulator in Africa’s biggest economy, has consistently made it clear that his main agenda for the capital market is implementing the masterplan.

The vision of the masterplan is to “ be  Africa’s modern, efficient and internationally competitive market that catalyses Nigeria’s emergence as a top 20 global economy, reflecting an all-encompassing ambition intended to lay a strong foundation for growth.”

A number of key initiatives within the master plan have received priority. These include E-Dividends, Dematerialisation, Direct Cash Settlement, Unclaimed Dividends, Non-Interest Products, Robust Public Enlightenment, Corporate Governance Scorecard, Stronger Enforcement, Responsive Rulemaking and the National Investor Protection Fund.

Nigerian capital markets have largely recovered from a 2009 financial crisis triggered by loans given to stock speculators and fuel importers in Africa’s biggest oil producer.

The value of the bourse’s main index has almost doubled in five years from about N5 trillion in 2010 to N9.6 trillion on Friday Nov 20.

Challenges however remain at the macro level, from the fall in crude prices to below $50 a barrel, which has put a fiscal strain on the Federal and state governments.

This led SEC to recently oversee a loan restructuring effort in conjunction with the Debt Management Office (DMO) that converted about N575 billion in state government loans into longer tenured debt instruments, to help free up their balance sheets.

This should then allow some states the room to raise new bonds to help bridge funding shortfalls.

SEC plans to start separate meetings with the states this year, which will be a forum to educate the leadership “about the importance of capital  the market,” Gwarzo said recently.

“Once the instruments (state bonds) are good and investors are comfortable, we believe they will invest,” Gwarzo said.

The commission requires a debt-to-revenue ratio of 50 percent or less for states tapping the market.

The new reforms being championed by the SEC should enable Nigeria’s capital markets move to the next growth phase by engendering investor confidence as well as attracting new listings, especially in the oil and gas, power and telecommunications sectors, to help meet the goal of reaching a market value of $1 trillion.

Developed with support from the International Finance Corporation (IFC), Nigeria’s first Corporate Governance Scorecard for public companies is a tool for the assessment of corporate governance practices.

The National Investor Protection Fund (NIPF) and inauguration of the NIPF Board, will mean that Nigeria is now among only a few countries with a national investor protection fund to compensate investors for pecuniary losses arising from bankruptcy, negligence or malfeasance by a non-broker/dealer capital market operator.

The NIPF will be overseen by a board composed of seven members, to be chaired by the SEC director- general.

PATRICK ATUANYA