By Tony Obiechina, Abuja
The Federal Government’s aspiration to grow the nation’s economy by a trillion dollars and $3 trillion within a decade respectively has found expression and allies in the nation’s capital market community.
President Bola Ahmed Tinubu had told the business community who gathered at the Nigerian Economic Summit in October that Nigeria’s economy can grow by US$1.0 trillion and US$3.0 trillion is possible by 2026 and within 10 years respectively. He added that financing the country’s US $3.0 trillion national infrastructure stock can be achieved in 10 years and not 300 years.
According to him, “Building megacities in every geopolitical zone of the size and scale of Lagos, must not take us another six decades. We can do it in one decade. A fully networked and connected Nigeria by rail, gas, fiber optics and road network can be constructed in less than 20 years.”
While some people may consider it as a political statement, the Director-General of the Securities & Exchange Commission Mr. Lamido Yuguda who doubles as Chairman of the Capital Market Committee is confident and optimistic that it can be achieved by unlocking the full potentials of the capital market and aligning it with the Renewed Hope Agenda of the President.
This he said on Thursday 16th November 2023 at The third 2023 Capital Market Committee (CMC) meeting held at the Federal Palace Hotel, Lagos.
Present were major key decision makers of the capital market and key industry players whom he had invited for the occasion.
Among these were representatives from the National Assembly, the Federal Ministry of Finance, Federal Inland Revenue Service, Central Bank of Nigeria (CBN), Bureau of Public Enterprise (BPE), Asset Management Corporation (AMCON), National Pension Commisssion (PENCOM), Ministry of Trade and Investment, Nigeria Investment Promotion Council (NIPC);
Others included Representatives of Trade Groups; Chairman of the Senate Committee on Capital Market; Chairman of the House Committee on Capital Market and Institutions; Chief Executive Officers of Nigerian Exchange; Abuja Securities and Commodity Exchange; Central Securities Clearing System (CSCS); and Chartered Institute of Chartered Brokers (CIS); Asset Management Corporation of Nigeria (AMCON); Corporate Affairs Commission (CAC); Debt Management Office (DMO); Central Bank of Nigeria (CBN); Federal Ministry of Finance (FMF); Federal Mortgage Bank; Federal Inland Revenue Service (FIRS); Nigerian Deposit Insurance Corporation (NDIC); Investment and Securities Tribunal (IST); Nigerian Investment Promoting Council (NIPC); National Insurance Commission (NAICOM); National Pension Commission (PENCOM).
There was no better and appropriate place to consider an effective implementation of such a big ambition. The capital market is the only platform specifically structured to bridge medium-to-long term financial resource gap for an economy, distinct from the money market segment which is structured for providing short tenured funds of not more than 12 months.
Lagos as mentioned by Mr. President is not a misstatement. It remains the most industrialized state in Nigeria and sub-Saharan Africa. It resorted severally to the capital market to source its funding through issuance of state bonds to finance infrastructure development projects, made possible with supporting disciplined legal processes such as enactment of new Bond Law, establishment of Irrevocable Standing Payment Orders which guaranteed payment to bondholders; the use of a Consolidated Debt Service Account (CDSA) and Sinking Fund for the benefit of bondholders.
At the meeting, Chairman of the Senate Committee on Capital Market, Senator Osita B. Izunaso; his Deputy, Senator Peter N. Jiya as well as Chairman of the House Committee on Capital Market and Institutions, Hon Solomon T. Bob; and his deputy Hon. Dr. Mukhtar Umar Zakari were unanimous in pledging the readiness of their committees to contribute towards facilitating the development of an ecosystem that would ensure efficient access to capital formation through regular and effective consultation, cooperation and information exchange.
Senator Іzunaso, informed the Committee that legislative initiatives such as the repeal of the Investments and Securities Act (ISA) 2007, has already passed 1st and 2nd Reading at the House of Representatives and also 1st reading at the Senate. His immediate assignment would be to help in expediting the process and aiming for submission to the President for assent by first quarter of 2024.
He then reaffirmed that the envisioned one trillion-dollar economy can be realized through effective collaboration and productive actions in the market.
The various technical committees’ quarterly reports as presented confirmed resilience of the nation’s capital market and its positive achievements in spite of the global economic and political turmoil, uncertainties and tension, less than expected growth projections and economic, business activities.
Some major achievements paraded include the about-to-be launched revamped e-Dividend portal, a collaborative effort of the e-Dividend Mandate Technical Committee, the Institute of Capital Market Registrars (ICMR) and Nigeria Interbank Settlement System Plc (NIBSS).
The launch of the revamped e-Dividend portal will bring a host of benefits to investors, further minimizing infractions by registrars. The e-Dividend portal is part of the E-Dividend Management System (E-DMMS) which has been seen as a breakthrough in solving the problems of unclaimed dividend in the Nigerian Capital Market, now risen to about #190 billion.
Since its launch on November 23, 2015, it has provided investors with direct access to their dividends while the endemic problem of stale dividend warrants has been eliminated.
Furthermore, travelling from one place to another to deposit dividend warrants has been eliminated. The revamped portal will provide more comprehensive and updated data from 18 out of 19 Registrars.
The dynamics of the non-interest capital market is blossoming as more and more investors enter to participate in successive issuances of Sukuk.
The issuance of the 6th FGN Sukuk by the Debt Management Office (DMO) witnessed a remarkable success in subscription level of 435 percent. There was also a flotation of an additional Shariah-compliant fixed Income fund. Plans are being finalized to expand awareness and engagement of various stakeholders to explore the development of Shariah-compliant Liquidity instruments for the commodities market and more efforts are being made towards the creation of short-term Sukuk with DMO.
Plans are also underway to secure approval of certain standards and the adoption of additional commodity standards that are already sanctioned by the African Organization for Standardization (ARSO)
De-risking the commodities’ ecosystem is also being envisaged to introduce insurance products suitable for the needs of commodities producers and traders.
From the Nigerian Exchange (NGX) there was a +36.67 percent rise in performance of the All Share Index underscoring the market’s resilience in spite of a slow-down in the participation of foreign investors. Improved sentiments among domestic retail investors and attractive yield of some stocks were some of the major contributors to the improved performance.
FMDQ emerged from the 3rd Quarter with a number of good news, including its recent launch of the Nigerian Housing Strategy Blueprint (NHSB) to the Federal Ministry of Housing and Urban Development. It was also reported that all stages of the FMDQ Derivatives Market Development Project have been successfully executed, while necessary regulatory approvals have been secured for additional derivatives products.
A 23 percent growth in the average daily clearing and settlement value brought the Central Clearing and Settlement value to around #10.7 billion in the third quarter of 2023 and a 60 percent increase on a year-on-year basis is good news. It was also noted that monthly investor KYC recorded 8,572 Accounts being updated, amounting to 31 percent increase when compared to Q2, 2023 record.
Capacity building for the Nigerian Capital Market will soon receive a boost , courtesy of the Nigerian Capital Market Institute (NCMI) which has turned around its faculties towards achieving academic excellence and injecting industry experience. Its Board of Directors has approved the introduction of seven (7) new specialized programs on Investment Banking, Compliance, Islamic Finance, Investment Management, Corporate Governance, Commodities Market and Fintech. READ ALSO:
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The appointment of Mr Anthony Atuche as Managing Director and Chief Executive Officer of the Nigerian Commodities Exchange and the rebranding of the Agency are welcome developments for revamping the agency and refocusing it for optimum performance. For several years, the organization has been operating under a Transition Management Team. It has now been rebranded as an institution with a private sector outlook but with public sector ownership.
In order to launch out fully towards deploying all its arsenals to support the president’s ambition, more effort must be expanded in the following areas: Digitization; Market modernization; Further collaboration with local and international bodies, e.g. the International Organization of Securities Commissions (IOSCO), African Stock Exchange Association (ASEA), multilateral Agencies such as the World Bank; creating more awareness of the benefits of the capital market, none existence of the Non-Interest Pension Funds; establishment of commodities market for Non-Interest instruments; expanding the current limited pool of investment grade potential for corporate Sukuk issuers within the Capital Market, increase the patronage of foreign investors which market has remained skewed domestic investors, the recent reclassification of Nigerian securities indices by FTSE-Russel and MSCI, due to foreign exchange liquidity challenges and its effects on investor confidence.
The Securities & Exchange Commission has noted these challenges and is taking drastic measures to overcome them with new strategies, taking into consideration the detailed and revised Nigerian Capital Market Master Plan 2015–2025 which remains a blueprint for positioning the capital market for efficiency and international competitiveness.
