Nigeria has stepped up its capital market development efforts believed to help address challenges that hitherto discouraged investors from investing in the market.
Only yesterday, the Securities and Exchange Commission (SEC), Nigeria’s apex capital market regulator, launched the Corporate Governance Scorecard for Public Companies in Nigeria; the National Investor Protection Fund (NIPF); as well as inaugurated the Capital Market Master Plan Implementation Council (CAMMIC).
Stakeholders at the launch reaffirmed their belief that investors are at the heart of any thriving securities market.
Their invested savings are the critical ingredients for market liquidity and capital formation which implies that investors supply the lifeblood of any modern economy.
To bring the retail investors back to their rightful place in the market, SEC has among others set up the National Investor Protection Fund which is to be chaired by Mounir Gwarzo, DG Securities and Exchange Commission and aims to compensate eligible investors who may have suffered losses in the capital market.
With this development, Nigeria joins a handful of countries in the world with a dedicated national investor protection fund.
In accordance with the NIPF rules, the SEC provided an initial take-off grant for the fund. Other sources of funding will be grants, subventions, donations, annual contributions to be made by the capital market operators who are not subject to contribute to the Investor Protection Fund of securities exchanges and capital trade points.
Assets, properties or cash that are realised from liquidated operators, proceeds of investment of the resources of the Fund and monies borrowed by the Board for the purpose of the Fund shall also serve as financial support for the operation of the Fund.
The Corporate Governance Scorecard for public companies in Nigeria developed by the SEC with support from the International Finance Corporation (IFC) is a tool for the assessment of corporate governance practices. It is aimed at measuring the adherence to the Code of Corporate Governance.
The Scorecard would also be used to assess the progress of companies governance practices overtime and compare different companies within or across sectors.
With the introduction of the scorecard, a more robust reporting system on compliance with the Code of Corporate Governance for Public Companies has been developed.
On its side, the Capital Market Master Plan Implementation Council is a high level implementation and advocacy body, set up to drive the realisation of the goals and aspirations articulated in the 10-year Nigerian Capital Market Master Plan. An implementation governance structure was proposed within the Master Plan to be overseen by a top-level implementation council (the CAMMIC), whose major responsibility is to drive advocacy at the highest levels for the Master Plan implementation and ensure national ownership of the project.
The Council which is chaired by Olutola Mobolurin (who is also the chairman of NASD plc and Capital Bancorp plc) is likewise expected to provide strategic guidance to the entire capital market in implementing the Master Plan.
Speaking at the ceremony, Shamsuddeen Usman, former minister of national planning said, “I commend the SEC for the important work done so far; I understand several of the initiatives contained in the Master Plan are already being implemented and some are even nearing completion”.
These, he noted, include E-Dividends, Dematerialisation, Direct Cash Settlement, Recapitalisation, as well as Corporate Governance Scorecard and National Investor Protection Fund which were launched yesterday.
He said “This has been long overdue, considering the fact that prior approaches to capital market development have not led to the desired progress because efforts were discrete, uncoordinated and oftentimes duplicative.
“With a detailed master plan, we get to reap the benefits of strategic thinking, policy consistency, greater coordination, and hopefully better results. I urge everyone to see this as the important National assignment it represents. Capital markets are so critical to the emergence of the kind of economy we intend to develop for Nigeria.
“It is noteworthy that no country has been able to develop without a thriving capital market. Efficient and vibrant capital markets are an indispensable feature of any modern economy supplying affordable medium-to-long term capital needed for growth.
“They facilitate mobilisation of savings, accelerate capital formation, provide investment avenues and enhance efficient allocation of capital to growth sectors. Nigeria needs and deserves a capital market that is characterised by high levels of liquidity, depth, breadth and sophistication to enable rapid socio-economic development,” Usman said.
Earlier in his speech, Gwarzo said, “The Master Plan was developed from the work of three industry-wide committees, each tasked with a specific tasks of developing a blueprint for the growth of different market segments. I must commend the vision of the immediate past Director General of SEC, Arunma Oteh for setting up these committees, while equally appreciating the chairpersons and members of the three committees for their excellent work.”
He identified the three committees as: Committee on Entire Capital Market: This committee was chaired by Adedotun Sulaiman. Their work covered all major areas of the capital market and came up with the overall vision of the 10-year plan; Committee on Capital Market Literacy: Ariyo Olushekun led this work-stream to produce a long term strategy document for financial inclusion, investor education, stakeholder-engagement and public enlightenment in Nigeria; and Committee on Non-Interest Capital Market Products: This committee worked on ways to deepen the non-interest capital market space in the country and improve familiarity of such products among Nigerians.
“We have consolidated the reports from these three committees to produce the 10-year Capital Market Master Plan. The vision encapsulated within the Master Plan is “to be Africa’s most modern, efficient and internationally competitive capital market that catalyzes Nigeria’s emergence as a top 20 global economy. We hope to achieve this by 2025, quite a daunting challenge, but certainly achievable with faithful implementation,” the SEC DG said
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