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Arunma Oteh and her quest for a world-class capital market

A financial sector in revival on back reforms

Arunma Oteh is a household name in Nigeria’s capital market and investment banking circles. She can be described as the female technocrat setting the rules for about N20 trillion worth of investment securities in Nigeria (from bonds to equities and everything in-between) since 2010.

At the time of her resumption as director-general of Nigeria’s Securities and Exchange Commission (SEC) in January 2010, the country had a N9.9 trillion capital market dominated by equities, with no active domestic bond market except Federal Government-issued bonds. And the market was plagued by rampant allegations of infractions that went on unchecked. Illicit payments were said to have been demanded and received for the listing of equities. Some even likened the market to a casino.

Five years later under her watch, the domestic bond market would match the equities market for size at about N9.95 trillion, and include a fair mix of federal, state and previously non-existent corporate bonds.

Oteh was once quoted at a retreat for capital market correspondents in 2013 as saying that the amount of corporate bonds raised from 2010 to date was more than two-and-a-half times all the bonds issued by corporations from 1960 to 2009. This was no small feat and broadly attested to her “faithful implementation of a therapy of reform measures driven by the vision to transform the Nigerian market into a world-class market”, according to a statement on the SEC website commending the outgoing DG.

Arunma Oteh

“She was in a hurry to see Nigeria achieve a world-class capital market that would drive development and make Nigeria one of the most attractive investment destinations,” the statement adds.

In November 2014, Oteh was awarded West Africa’s Business Woman of the Year at the All Africa Business Leaders Awards (AABLA). The award recognized her (and other nominees) for “the game-changing vision that has helped to grow the West African economy, with Nigeria making incredible strides in this regard”.

However, it was not always smooth sailing for the one-time vice president at the African Development Bank (AfDB). Arunma Oteh’s revolutionary reforms at the SEC clearly put her in the crosshairs of unpopular opinion and powerful interests intent on resisting change and maintaining the ugly status quo.

Read also: Oteh and crippled capital market reform

In April 2012, a public inquiry by the House of Representatives Committee on Capital Markets and Institutions investigating the near collapse of the Nigerian capital market in 2008 quickly degenerated into a hearing on bogus allegations of financial imprudence against the commission and its leadership. The published intentions of the investigation were sidelined in what became a spectacle that did the House no good.

Armed with dignity and facts, the Harvard MBA graduate stood her ground against personal attacks, while challenging the credibility and agenda of the leadership of the House committee after cases of financial misappropriation had been revealed. Not surprisingly, an independent investigation by PricewaterhouseCoopers later cleared Oteh of any financial impropriety in July 2012.

Emboldened by her victory and a sincere desire to serve Nigeria, Arunma Oteh went on to lead a distinguished tenure as director-general of the SEC up till her exit last week, leaving groundbreaking achievements in her trail. Some of her notable achievements include:

•Restoring investor confidence through strong enforcement actions and improvement of rules and regulations, and investor education. SEC established the National Investor Protection Fund and strengthened its Administrative Proceedings Committee.

•Deepening and broadening the market through significant product innovation, landmark bond market reforms (which attracted Triple A issuers such as AfDB and the IFC to issue bonds), introduction of Exchange Traded Funds (ETFs), licensing the National Association of Securities Dealers (NASD) and Financial Market Dealers Quotation (FMDQ) which have expanded market access.

•Strengthening disclosures and transparency by spearheading the implementation of international financial reporting standards for listed companies.

•Promoting good corporate governance by publishing a new code of corporate governance for the Nigerian markets, which was aimed at standards improvement in line with international best practice.

• Building capacity in the market by specifically enhancing personnel and technological capacities at the SEC Nigeria through (re)training of human capital.

Arunma Oteh is well respected by capital market players in Nigeria and the continent for her achievements as a regulator.

“She has done a very credible job at the SEC,” says Ike Chioke, the Oxford University-trained managing director at Afrinvest West Africa, a leading boutique investment bank in Nigeria.

“She came in five years ago, one year after the financial crisis. It was during her time that the needful transformation at the NSE was made to allow the current director-general, Oscar Onyema come on board. The combination of herself and Mr. Onyema created the market that we have today. I think she has done a fantastic job and she should be very proud of her accomplishments. I wish her more positive achievements in her future endeavours,” he added.

Ngozi Okonjo-Iweala, Coordinating Minister for the Economy and Minister of Finance, under whose ministry the SEC functions, has this to say about Arunma Oteh: “The former DG of SEC Ms. Arunma Oteh is a thoroughly smart professional and a hard worker who put in great effort to reform and strengthen the regulatory framework of the capital market, thereby enhancing its performance. She also reached out to tap international knowledge in this regard. We are grateful to her for services rendered.”

Arunma Oteh now bequeaths her successor, as she exits, with a 10-year master plan that envisions a world-class Nigerian capital market by 2025.

Outlining her vision at a retreat for the Capital Market Committee in November 2014, Oteh says the Nigerian capital market must be “a deep, highly liquid, broad and diversified market that is a multiple of Nigeria’s GDP” by 2025.

According to her, the ratio of market capitalization of listed stocks to GDP in Nigeria is still very low at only 16 percent compared to 247 percent in Malaysia, 207 percent in South Africa and 112 percent in Brazil.

“We want a market that is very inclusive with majority of Nigerians participating in it through a multi-trillion naira collective investment schemes industry. We want a bond market that will enable us meet the infrastructure deficit estimated at USD3.9 trillion over the next 30 years,” Oteh says.

“We want a market that does more for housing finance, enabling Nigeria close down the 17 million housing unit deficit while supporting entrepreneurship by doing more for SMEs and start-ups. We want a capital market that combines all the elements needed to support Nigeria actualize her aspirations of peace and prosperity for all citizens,” she concludes passionately.

There is no doubt that Arunma Oteh’s exemplary five-year tenure as DG has laid the visionary foundation for Nigeria to become a world-class capital market. It is hoped that her successor will build on this foundation with great fervour and commitment.

 

Contributed by Akin-Olusoji Akinyele, senior economist, BusinessDay.