SEC Nigeria To Simplify Capital Market Operations, Attract Young Investors

The Director-General of Nigeria’s Securities & Exchange Commission (SEC), Lamido Yuguda, on Friday assured that his management team is working to demystify capital market investing in the country over the next five years.

Fielding questions during the virtual post-Capital Market Committee (CMC) meeting, the first since he assumed office on July 7, 2020, he said simplifying market operations is the way to attract more investors and issuers, thereby ensuring that the market plays its critical role expected of it in the economy.

For Yuguda, the capital market can indeed be as simple as opening and operating a bank account.

Capital market transactions, he regretted, “are quite complicated,” a situation he said, “has not helped to attract investors.”

From the time of opening a share account to operating it “is really complicated, and along the line a lot of things can happen along the line.”

The new SEC management, he further assured, will take investor protection beyond being just a sing-song, noting that a lot of loopholes in the rulebook are currently exploited to shortchange innocent investors. These, he stressed, will be plugged as investor confidence is needed if regulators and operators are to be trusted with hard earned investible funds.

“To increase the visibility and attractiveness of our market, we shall work towards maintaining an environment that is enabled by the appropriate regulatory framework, timely and affordable access to the market, zero tolerance for infractions, heightened investor confidence and awareness, innovative product development and good governance practices,” he stressed further. 

Yuguda regretted also that an estimated 400,000 share accounts in a population of about 200m is abysmally low, even as the current 50-year average age of investors is a disaster waiting to happen.

”We need to restore investor confidence and attract the retail and young investor into the market. Thus, we will ensure strict enforcement of our Rules and Regulations, strengthen our enforcement regime and clamp down on illegal operators luring unsuspecting investors with various Ponzi Schemes,” added.

Consequently, he said the commission will drive investor education, with targets split into primary/secondary schools and tertiary institutions and infusion of capital market studies into their curriculum.

Another class of potential investors in need of tailor-made capital market education, he said, are employees with little or no knowledge, and are therefore not participating in the market. These will also be targeted to grow the Nigerian retail investor pool, he assured.

In addition, Yuguda said: “expect a very vigorous implementation of the 10-year Capital Market Master Plan.”

The Coronavirus (COVID-19) pandemic, which “has shown how deficient our economy really is,” he believes, offers an opportunity for the capital market to help develop facilities within the country that will help the country save its scarce foreign exchange earnings being frittered in the form of going abroad for medical attention, or tourism.

In developing these facilities, however, the SEC boss said there is need for the right policy environment, following the commission will seek collaboration with government and other regulatory agencies, as the only way of attracting the right investments that takes care of the nation’s needs.

Still on market infractions, Yuguda said his management team inherited a lot of cases which are being resolved, working with the various Self-Regulatory Organisations (like the Nigerian Stock Exchange, FMDQ Exchange and NASD) and Capital Market Operators (such as stockbroking firms, registrars, issuing houses, solicitors).

The plan, he said, is to reduce infractions to the barest minimum, adding “we have very strong resolve to resolve infractions quickly.”

The thorny issue of unclaimed dividend in the market is being looked at critically, he said, assuring that a statement will be issued soon on the way forward.

Responding to another question, Yuguda noted that the Nigerian capital market had been in need of a revamp even before COVID-19. There was the need to attract more investors in the market and the market has to show that return on investment is above inflation rate and that this is not possible in the fixed income market.

There was also the problem of quoted companies delisting from the Nigerian Stock Exchange (NSE), hence the need to assure existing and potential issuers (companies) that the market offers a level playing field.

Companies also needed to be assured that the benefit of raising capital through the market outweighs obtaining bank loans

He also noted the low participation of Pension Fund Administrators in the stock market and the need for why they are not investing even up to the minimum allowed by that sector’s regulator.

Photo caption: From right, the Director-General of the Securities & Exchange Commission (SEC), Lamido Yuguda; Executive
Commissioner, Corporate Services, Ibrahim Boyi; and Executive Commissioner, Operations, Dayo Obisan, during the First Post-Capital Market Committee Webinar Press Briefing in Abuja on Friday, August 21, 2020.