• Tuesday, May 28, 2024
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Oteh and crippled capital market reform


 The former chief justice of Nigeria, Alfa Belgore, once reminded us of how the German government in 1962 came and set up our Defence Industries Corporation (DIC) and how in the same 1962 the same German government planted the same seed in Brazil, the Brazilian Defence Industries. While the Brazilians have since blossomed their own seed, such that Brazil now produces a wide range of military and civilian equipment (including fighting vehicles, assorted military and civilian aircraft, trucks, luxurious buses, and so on), our DIC ended up being known for the salt it produced (DIC salt). We are today gleefully importing manufactured products from Brazil. This example illustrates how terribly our nation has retrogressed, and why we must urgently start changing things.

In 2009, President Yar’Adua brought Arunma Oteh to help clean up the mess in the Securities and Exchange Commission (SEC) and the capital market it regulated. The previous director-general of the SEC, Musa Al-Faki, had been forced to resign following the collapse of the capital market in 2008 (which had wrecked thousands of investors) and the SEC’s poor performance. Oteh, with an Ivy-league background, embarked on numerous reforms of both the capital market and the regulatory agency. Many people may not know that these reforms (and the many toes that had to be stepped on) could actually have been her original sin.

Last year, the House Committee on Capital Markets and Institutions launched a public inquiry “into the near collapse of the Nigerian capital market in 2008”. Although this inquiry was somehow belated, many investors hoped that the people who had wrecked them were finally on their way to where they belonged (in jail). Unfortunately, the committee bungled this vital national assignment, which misled the respected House of Representatives and its speaker, Aminu Tambuwal.

First, the committee from the very first day beamed an inquiry that was supposed to be on the near collapse of the Nigerian capital market in 2008 on Oteh, who was not even there during the collapse. It was particularly bizarre how the committee gave VIP treatment to the principal characters in the collapse (from the CBN, SEC, and NSE) who should have been asked hard questions. No wonder the committee’s work cannot today be said to have provided any solace to those that were ruined by the collapse, nor even seriously served to discourage a reoccurrence.

The committee also failed to read the reform environment that drove the SEC’s staff and commissioners to testify against their DG. It was like bringing education-sector workers to testify against Oby Ezekwesili, or power-sector workers against Bart Nnaji. Poor SEC staff! They had every reason to protest because the SEC’s indolent civil-service world was giving way to Oteh’s vision of a new world-class regulator, capable driving a capital market in our globalising economy. They suddenly found themselves on their toes. Many traditional comfort zones for easy staff enrichment (travels, training estacodes, sundry allowances, etc) were giving way to value-driven programmes of a serious-minded regulatory agency. What the SEC’s staff union did was, therefore, not different from what our power sector union (or any union for that matter) would have done. But the committee seemed to miss this completely!

The real question is: Do we need a new world-class regulatory agency (as Oteh is midwifing) capable of not just driving the kind of capital market needed for Nigeria’s development, but also preventing a reoccurrence of the 2008-type of disaster? Or do we sustain an indolent civil-service kind of SEC, which will not even understand the language of the wiz-kids in our globalising banks and other players in the capital market? Such a SEC will be nothing but another stock market disaster waiting to happen! Therefore, by appearing to take sides with the protesters, the committee effectively emboldened the forces against reform, which was an outright national disaster!

Finally, the committee misled its colleagues and the respected speaker by sensationalising bogus figures of wastes and corruption against Oteh, without duly cross-checking them. What happens now that those wild figures (N2 billion, N850,000 hotel bill daily, etc) have proved to be unfounded? The respected speaker should ask for the report by PricewaterhouseCoopers (PwC), an international firm of consultants which did a more competent investigation. Ironically, it was SEC’s board that engaged PwC after suspending Oteh in a bid to nail her decisively. But PwC, very remarkably, ended up vindicating her and acknowledging the positive impact of her reforms on the capital market!

The respected speaker can also try to speak to the over 50 young professionals recently recruited by SEC (to help drive Oteh’s emerging regulatory environment) – and confirm the unthinkable: young Nigerians were able to get into Nigeria’s present-day public service (yes, Nigeria) without godfathers.

It is a national tragedy that only the public officials trying to change and improve things in this country get hounded and castigated, while all the others that are doing absolutely nothing are left to have their peace. That’s why Nigeria ranks among the world’s most retrogressing nations in practically all developmental indices (poverty, healthcare, infant mortality, unemployment, education, etc), despite having some of the most endowed minds in the world. Why not, since we always stand by while our vested interests frustrate every national programme that tampers with the status quo! Notice that this is again what is happening to our capital market reforms. The Financial Times of London was already forecasting (based mostly on Oteh’s reforms) that Nigeria’s capital market would record one of the fastest recoveries worldwide in 2013; but the present standoff between the House of Representatives and the executive (on Oteh) has practically crippled those reforms.

That is why I must strongly appeal to the respected speaker of the House of Reps, Aminu Tambuwal, to promptly call off this standoff. The House can find a more patriotic arena for tackling the executive. Anything that slows down the ongoing capital market reforms is not in our nation’s interests.

On her part, Oteh, who has just received our nation’s baptism, must not lose the inspired enthusiasm with which she has worked. One of the ironies of reform is that the larger public who will benefit from it are silent (often, even uninformed), while those who will lose from it know themselves and are quick to come together to fight it. Oteh can take solace in the highly commendable steadfast support she has received from President Goodluck Jonathan. That kind of support is the only way to create progress in a nation shackled by vested interests. If not that President Olusegun Obasanjo defied all opposition in 2004 to stand by his reformer, Charles Soludo, our bank consolidation (and all the economic benefits that came with it) would never have seen daylight.

Finally, and most importantly, the time has come for our political leaders at all levels to begin to focus their energies on the real issues that matter for Nigeria. It is ridiculous that our leaders could be dissipating energy on SEC and Oteh when their counterparts in other emerging nations are racing their countries towards the huge opportunities that globalisation is creating for all nations. Look at how Korea and fellow Asian nations (backed by visionary national policies) are now taking over the game-changing global market for smartphones and tablet computers (which are the next ICT frontiers). It is unprecedented, but Samsung Electronics of South Korea has just dethroned all western firms to become the market leader (32.7 percent of the global market share), while America’s Apple comes a distant second at 17.3 percent. This same South Korea, just a few decades ago, was a poor, underdeveloped country devastated by civil war, with a mere $87 as GNI per capita (equivalent to that of Ghana at that time).

In the same way, it was only a few decades ago that Indian professionals (both men and women) flooded this country, teaching even in our secondary schools. Today, while our leaders are bickering about SEC (and an oil-driven federal budget under N5 trillion), India’s export revenue in 2011 (without oil) exceeded N45 trillion! Let us please call off this distracting standoff and start focusing on things that matter for Nigeria.



Zowam, a reform & reengineering expert, is executive director, Centre for Leadership Support & Social Progress, Abuja.


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