SEC, Nigeria’s capital market and the economy

Since its establishment some decades ago, the Securities and Exchange Commission, SEC, has been involved in numerous engagements geared towards meaningful economic growth and development in Nigeria. As the main regulatory agency for the capital market, SEC supervises the primary market for fresh issues in collaboration with the Nigeria Stock Exchange, NSE. SEC guides the […]

Since its establishment some decades ago, the Securities and Exchange Commission, SEC, has been involved in numerous engagements geared towards meaningful economic growth and development in Nigeria. As the main regulatory agency for the capital market, SEC supervises the primary market for fresh issues in collaboration with the Nigeria Stock Exchange, NSE. SEC guides the pricing and timing of primary issues, in order to ensure that the capacity of the market is not exceeded, and that each issue is fully subscribed to, as much as possible.

As enticing as the above mandate of SEC are, many Nigerians were not aware of the agency’s existence, let alone its operations. Only a fraction of the elite had insight as to what SEC really is, its activities and services.

However, within the past five years, due to a combination of human infraction, ethical dislocation and natural occurrences, more people are now informed about the relevance of SEC in national economic growth and development.

From Professor Chukwuma Soludo’s reduction–of–bank’s agenda, to the global economic recession and Sanusi Lamido Sanusi’s on–going reform programme, many Nigerians are now better informed  about the strategic position of SEC in driving the nation’s economy.

Perhaps it is in realization of this and the necessity to re-position our capital market sub-sector, that President Goodluck Jonathan effected change in the hierarchy of the Securities and Exchange Commission. In December 2009, Ms. Arunma Oteh, assumed offices as the Director General of SEC.

As expected, typical of most public officials, the former African Development Bank Official, in her maiden media interface, promised to re-jig and re-order the capital market to effectively play its role as the main pilot of Nigeria’s economy.

Having called the shots for one year, it is expected that SEC, under the new management team, should have hit the ground running–expected to turn around the capital market. It is on these premise that the writer attempts to appraise the agency’s activities.

Early this year, numerous activities involving major players in the Nigeria Stock Exchange, led to widespread criticism amongst Nigerians and stakeholders. Not minding the economic status and intimidating personalities of those involved, the SEC took bold steps. Realizing the continued eroding of Investors’ confidence and negative impact on the market, as a result of serial unethical operations, SEC moved swiftly by removing the DG of NSE, Ndi Okereke – Onyuike; restructuring of NSE’s management; re-positioning of NSE amongst other measure.

The SEC’s timely intervention has yielded positive results, as it has slowed down the all-time fall that was emerging in the capital market. This has also led to renewed confidence amongst stakeholders. To curtail financial leakages and unethical market practice, SEC replaced the existing trading platform with a more efficient and robust system; that will enhance NSE’s response to future growth in the capital market.

Conscious of the need for closer monitoring of capital market operations, SEC embarked on more frequent, resourceful and responsive on – site inspections of market players and entities. Similarly, new rules have been introduced to encourage the emergence of new products, strengthen the protection of customer assets and improve financial reporting and governance of public companies. The SEC has further strengthened its robust Internal Control System to safe guard the agency’s assets, and ensure, at all times, the accuracy and reliability of its financial records.

Realizing that SEC cannot do it alone, the new management entered into collaboration with relevant local and foreign agencies/stakeholders to protect the credibility of the capital market. A Resident Nigeria Police Desk has been established within SEC to deal with matters which involve criminal violations of the Securities Law. Prosecutors from the Ministry of Justice were seconded to SEC, to accelerate swift dispensation of cases before the Commission.

These laudable steps have led to increased enforcement actions against individuals and entities. The SEC has instituted Legal Proceedings against about 300 companies and persons, at the Investment and Securities Tribunal, over numerous un-ethical practices such as capital raising exercises, insider dealing, and share price manipulation.

To underscore SEC’s determination in re-positioning the capital market, the Arunma Oteh – led team introduced a novel mechanism, which is first in Africa. With the establishment of Self Regulatory Organizations, SROs, delay in disputes will be a thing of the past. The SROs will quicken resolution of Investors complaints in the Market.

No doubt, the SEC deserves commendation for being able to put in place these turn – around measures and record landmark achievements, in just one year. That SEC, in spite of numerous bureaucracy in public service, could score these points, underscores the commitment and determination of its management to the evolvement of a virile capital market.

It is expected that SEC will not relent in its responsibility to drive the nation’s economic resurgence, with a view to attracting more foreign investment and make our capital market, world class.

Abolaji Samuel is Head, Corporate Strategy, Christalkings Ltd, Abuja.