The quest for stronger capital market

The leadership of the National Assembly promises to ensure speedy passage of new amendments to existing law to make Nigeria’s capital market stronger

Mounir Gwarzo, Director-General of SEC

Mounir Gwarzo, Director-General of SEC

Nigeria’s quest for a stronger capital market received a boost recently when the National Assembly pledged to ensure speedy passage of new amendments to the existing law to make the nation’s capital market more proactive. This will enable it to carry out its lawful activities and rejuvenate the nation’s economy.

Senate President Bukola Saraki said the economic reform bills that would make Nigeria investor-friendly were already at critical stages at the upper legislative chamber. According to him, legislations such as the Independent Warehouse Regulatory Agency Bill, Secured Transactions in Movable Assets Bill, Franchising Bill, Companies and Allied Matters Act (Amendment) Bill, Nigerian Ports and Harbours Authority Bill and Nigerian Railway Authority Bill were at various stages of consideration. He noted that the Nigerian stock market lost more than N1.63 trillion in January, this year due to profit-taking and currency volatility.

Speaker of the House of Representatives, Yakubu Dogara, also said that the lower house was in the process of tightening regulations in the stock market to ensure that investments were protected from fraudulent operators. He noted that this had become imperative in view of the fact that the nation was in dire need of investors to bring in their resources to diversify its sources of income. “We strongly believe that the capital market is a major tool for wealth creation and mobilisation of funds to grow and diversify the Nigerian economy. We want to emphasise that any proposed legislation must find a way to protect ordinary Nigerians, some of whom have invested their life savings in the market, from fraudulent market players,” he said.

Dogara pointed out that many Nigerians have tales of woe from the irresponsible activities of these unscrupulous stakeholders in the market.  He therefore described the recent regulatory sanctions on some stockbrokers and market players as a step in the right direction.

As the legislative arm of government enacts laws to tighten regulations in the stock market, the executive arm of government is also supportive. Vice President Yemi Osinbajo has advocated a strong capital market that would be empowered by law to carry out its obligation without hindrance. At a recent two-day capital market stakeholders’ forum in Abuja, Osinbajo said that Nigeria’s capital market required a stable macro-economic environment, strong legal and regulatory framework to protect property rights, good corporate governance as well as strong financial infrastructure.

The Vice President, who was represented by the Special Adviser to the President on Economic Matters, Mr. Adeyemi Dipeolu, said the nation needed a strong capital market to finance domestic borrowing plans.
The Federal Government had said it would borrow N984 billion from domestic markets to finance the N1.84 trillion deficit in the 2016 budget. “We need the capital market for mobilisation of finance. And to mobilise that finance, there is the need for enforcement of rules and regulations, which are the bedrock of capital investment,” Osinbajo said. He stressed the need for the review of existing laws such as the Investment and Securities Act, 1999. This, he said, would give full impetus to the potential of the capital market.

The President, National Council of the Nigerian Stock Exchange, Aigboje Aig-Imuokhuede, called for inclusive economic growth and promotion of a national savings culture. He said people usually invest based on facts, noting that a situation where the enabling environment did not suggest certainty in terms of the application of financial realities and principles, would create uncertainty and volatility in the market.

Interestingly, the Securities and Exchange Commission (SEC) and the Nigeria Stock Exchange, (NSE) have been working together to actualise the nation’s vision of building a stronger capital market. Both the Director-General of SEC, Mounir Gwarzo, and the NSE Chairman, Aigboje Aig Imokhuede have consistently emphasised the importance of such collaboration with key players to take the market to greater heights.

Recently, Gwarzo said the current management of the Commission was willing and open to discussions on issues that will move the market forward in the interest of Nigerians and economic development. “We realize that the Exchange is very important in our quest to move the market to a new level. SEC Nigeria, as the regulatory authority in the capital market, is keen on exploring areas of collaboration with stakeholders,”  Gwarzo.  The SEC, he added, was keen to ensure that the wealth of experience of some of the operators, who have been in the market for a long time, would benefit the market.

Aig Imokhuede said markets in other jurisdictions have benefitted significantly from collaborations between the regulators and the regulated entities. He expressed optimism that the market in Nigeria would also benefit from such close partnership. “We feel that the market here will benefit from this type of partnership and we will be keen on that,” he said.

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