(OPINION): Memo to the new Director General, Securities and Exchange Commission

Distinguished Director General of Securities and Exchange Commission (SEC), your appointment by President Muhammadu Buhari as the substantive DG at SEC is a welcome development. I join hands with others to congratulate you and wish you every success in your new role. Mr Lamido Yuguda your experience as an, economist, investment manager, CFA Charter Holder, former Director in Central Bank of Nigeria with over three decades of professional expertise in Nigeria including the IMF is commendable.

Therefore, your appointment is a good one for the capital market at this time that we are in a new normal due to COVID19 pandemic, where experience and thorough leadership is required. Consequently, to rise to the occasion, SEC needs to come up with policy responses that will cushion the effect of the COVID-19 on the Nigerian capital market as soon as possible. Expectedly sir, there is need to promote digital economy at this time and also develop regulatory policies and institutional framework to allow the Nigerian capital market function without hindrances or borders with technological innovations.

Further to this, there is need to improve on regulations to further promote remote trading, online submission of reports, virtual meetings, video conferencing, AGMs by proxies among others. In addition, it is expected that there would be need to decisively promote policy responses to curb manipulation and infractions in the capital market. This will stimulate the capital market and deepen market participation at this crucial time also promote economic recovery. More so, the capital market can provide and drive long term fund, it is my belief that you would encourage government and corporate bodies to access the capital market for long term fund needs through the issuance of domestic financial securities and instruments in the capital market.

Furthermore, I will encourage you to review current securities regulatory requirements applicable to listed companies and SMEs to that it can reflect current realities and help in the market recovery plan. The new normal has presented opportunities for robust technology adoption, I enjoin you to fully consider this in your regulatory roles and in the improvement of capital market operations. Especially in the effective use of technology to reduce the unclaimed dividend figure which is hovering around N90 billion.

The major problems associated with the prevalence of this culture of unclaimed dividends are lack of proper identity management, absence of the necessary knowledge, investors having multiple accounts without harmonisation and legacy issues due to deceased investors and the unwillingness of their family to tidy the estate account. Therefore, sufficient technology adoption and investors education are required as measures to reduce the high incidence of this unclaimed dividends in the country.

In addition, SEC can promote collaboration with CBN and other stakeholders in the Nigerian capital market to allow more participation of listed companies in the CBN economic relief which is the targeted credit facility, a stimulus package to support Micro, Small and Medium Enterprises in Nigeria. The Securities and Exchange Commission (SEC) can liaise with CBN to review the qualification guidelines, so that listed companies and the capital market as a whole can benefit adequately from the facility and also join in the laudable interventions to cushion COVID-19 effects.

That said, fiscal policy palliatives should be considered by SEC as measures to cushion the effect of the pandemic because most of the listed companies on the Nigerian Stock Exchange and SMEs have experienced supply chain disruption and depressing service/investment climate. Formulation of appropriate policies to attract Foreign Direct investment (FDI) and Foreign Portfolio Investors (FPI) are expected as you settle in the office. Because their involvement in Nigeria capital market gives positive significant impact on economic growth

In conclusion, fiscal incentives such as a reduction in transaction fees can be considered to attract more capital market participation. The SEC in conjunction with other regulators in capital market can formulate policies and regulatory framework to strengthen investor protection, ensure markets efficiency, fairness, transparency. It is also crucial to increase public awareness on the benefits of the capital market to SMEs in the area of seeking long term funds.

Timi Olubiyi, Ph.D is an Entrepreneurship and Small Business Management expert. He is a chartered member of the Chartered Institute for Securities & Investment (CISI). He sent this piece via drtimiolubiyi@gmail.com.

 

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