I have always known him by reputation. Our paths never crossed until November last year when I was invited by the Head of External Relations at the Securities and Exchange Commission (SEC), Mohammed Bagudu, to serve as an observer during a two-day training for the Capital Market Editors in Lagos. I understood the invitation as a subtle request for me to intervene during the brainstorming sessions. I honoured the invitation as an opportunity to interact with current editors and share my experiences, having reported on the market during the Call-Over Trading System up until the early ’90s.
When I was introduced, Dr Agama welcomed me warmly, as if we had known each other for a long time. This is understandable since he was at SEC while I was at The Nigerian Stock Exchange (now NGX). There is no doubt that the immediate past Managing Director of the Nigerian Capital Market Institute (NCMI), a subsidiary of SEC, is a consummate teacher. He was well-versed in the subject matter, and each time I intervened, he highlighted my points and urged the participants to take my contributions seriously.
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Given the substance and essence of the training, I wrote a piece entitled “Anatomy of the SEC’s Capacity Building for Financial Press.” It was published by many print and online newspapers. Dr Agama was very pleased with the publication and expressed his appreciation through a text message to me.
He made headlines in April this year when he was announced as the Director General of the Commission, succeeding the unassuming Dr Lamido Yuguda. I sent him a congratulatory text message. His exponential rise from Deputy Director to Director General can be seen as a touch of fate. However, no one can question Agama’s credentials. He has built a solid wealth of experience at the Commission, in addition to his pedigree as a Chartered Management Accountant, Chartered Stockbroker, Investment Banker, and Economist. He leads a team of seasoned stockbrokers. The new SEC Board also comprises some seasoned stockbrokers. But this comes at a cost—public expectations are high, as if they have a silver bullet to tackle the myriad of challenges plaguing the Nigerian capital market, which is, after all, a derivative of the economy.
To be the High Priest of SEC is no small feat; it is indeed a hot seat. Until a clear-cut autonomy is established, the SEC Director General will always be at the mercy of the Central Bank of Nigeria (CBN), the Ministry of Finance, and the occasional muscle-flexing by members of the National Assembly, who regard the Commission as a cash cow that must declare profit annually and possibly pay dividends.
In early September 2021, the National Assembly put SEC under pressure over the issue of profitability, when the lawmakers announced that the Commission had posted a deficit of N9 billion over three years. In response, the SEC stated that it had remitted N1.5 billion into the Federation Account. In a form of transferred aggression, SEC unwittingly raised dust by increasing the annual registration fees of the dealing member firms. However, the issue was later resolved, credit to the former administration. During that period, I wrote a piece titled “SEC and the Burden of Regulation,” where I argued that in countries like the United States, United Kingdom, China, and Japan, the SEC performs similar roles to that of Nigeria—promoting a market environment worthy of public trust. But unlike Nigeria, these countries do not remit funds to the government.
One of the immediate tasks before the new Commission’s Board is to enlighten the National Assembly that SEC is not-for-profit and should be supported by the government through grants, as is done in some jurisdictions, to supplement the cost of monitoring the market for enhanced investor protection.
Dr Agama and his team have started well, with applications said to be treated expeditiously. However, no one should envy this team. They face a mountain of Key Performance Indicators (KPIs), including the need to build confidence among internal staff. A new administration may embark on a staff audit, which is usually a double-edged sword. An appropriate communication model must be deployed because internal staff constitute a critical group of stakeholders in implementing an organisation’s vision and advancing its brand recognition.
The ongoing bank recapitalization is the first major assignment for Dr Agama and his team. It will also be a litmus test of investor confidence in the Nigerian bourse. There are growing concerns that a few “fat cats” among the issuing houses are crowding out other dealing-member houses through abuse of vending agreements and the setting up of dedicated portals to maximise profit and gain undue market advantage under the recapitalization scheme. The Commission should address this before it metamorphoses into an oligopoly market.
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The Central Bank Governor, Olayemi Cardoso, is under intense pressure as the apex bank struggles to combat the scourge of inflation. However, the bank’s model has made investments in money market instruments more attractive than other asset classes, thus undermining investment in the capital market. Many investors have yet to recover from the huge capital losses they suffered in the comatose primary market, where some issuers deceived investors and raked in money without sanction from the regulator.
The legacy issue of unclaimed dividends continues to haunt the market, despite the Commission’s use of information technology for seamless processes. More sophisticated products are emerging, and unscrupulous promoters are desperate to bypass SEC and swindle unsuspecting investors. The Commission must stay ahead of the game. It should also push for the development of the commodities ecosystem, which should be a priority in its requests to the government to help grow the Gross Domestic Product (GDP). Activities of corporate raiders and crises of sudden changes in majority shareholding in quoted companies are additional concerns in the market.
Today, the apex regulatory body supervises over five securities exchanges, in addition to other operators. Every new administration brings its vision. The new team may wish to update the Capital Market Masterplan in light of the rapid changes in the global capital market. However, no vision can succeed without stakeholders’ engagement. Who’s afraid of Agama? Agama and his colleagues need the constant support of market operators to navigate the challenging operating environment. They must consult widely and take advantage of the many talents in the market. SEC has much to put in place to build a strong brand voice and upscale investor confidence. The strength of the new team should be drawn from the immutable words of Abraham Lincoln: “Nearly all men can stand adversity, but if you want to test a man’s character, give him power.”
Best wishes to the new team.
Oni, an Integrated Communications Strategist, Chartered Stockbroker and Commodity Broker, is the Chief Executive Officer , Sofunix Investment and Communications.
