• Govt, Firms Raise N1.55tr in Nine Months

Governments and companies raised N1.55 trillion from the capital market within the first nine months of this year, an official has said.

Governments and companies are increasingly turning to the market to raise debt and equity capital.

Acting Director General, Securities and Exchange Commission (SEC), Dr Abdul Zubair said available data show that the capital market witnessed significant growth this year. He reassured investors that the apex capital market regulator would continue to ensure orderly operations of the market.

Speaking at the annual conference of the Capital Markets Correspondents Association of Nigeria (CAMCAN) in Lagos, Zubair said total issuances at the Nigerian capital market stood at N1.55 trillion by the end of third quarter ended September 2017. Equities accounted for 12 per cent or about N186 billion.

He noted that total equities transactions rose by 78.6 per cent to N1.655 trillion between 2016 and September 2017, with foreign transactions increasing by 47.31 per cent during the period.

Zubair pointed out that with the All Share Index (ASI) indicating average return of 47.11 per cent as at Thursday December 7, 2017, the Nigerian stock market has witnessed a remarkable recovery this year.

“Further to the commission’s commitments to ensure market efficiency, accountability and transparency in the capital market, the Commission wishes to assure the investing public and all stakeholders of its commitment to ensuring an uninterrupted and orderly operation of the market and the regulations thereof,” Zubair said.

According to him, the Commission is poised to continue to ensure the stability of the Nigerian capital market and maintain the high level of investor confidence observed in the market.

He urged the investing public and the mass media to make efforts to seek clarifications where necessary as the Commission is “always available to provide clarification on any issue”.

He outlined that the commission had launched several initiatives to support the long-term development of the capital market including dematerialisation, direct cash settlement, electronic dividend, complaints management framework, investor protection funds, compulsory corporate governance code and diversification of products through non-interest products.

“There are a host of other measures the Commission is pursuing to develop the capital market in a bid to make the dream of making the market the most developed in Africa by 2025 a reality,” Zubair said.’

Dematerialisation is moving from physical to digital manifestation of asset ownership. SEC had partnered with stakeholders to take all necessary steps to promote dematerialisation. Prior to the launch of the Capital Market Master Plan championed by SEC, less than 40 per cent of share certificates were dematerialised. This was the state of affairs by June 2015, more than 20 years since the establishment of the Central Securities Clearing System (CSCS). A host of problems were associated with the physical forms of share certificates. Losses of certificates and damage to them were often reported, with the attendant costs for investors and capital market operators.

“It is heartening to note that these problems are now things of the past. The SEC was able to achieve this by spearheading the process of digitalisation of share certificates in partnership with CSCS and Capital Market Committee (CMC). This enabled us to develop a dematerialisation from which investors were requested to fill in and submit to CSCS through their registrars. By the second quarter of 2017, the process had paid off, with nearly all share certificates now digitalised, thus completing the process of dematerialisation and therefore overcoming the problems associated with damages to or loss of physical share certificates,” Zubair said.

Before the advent of the direct cash settlement, investors could not receive proceeds of sale of their shares directly. Under the previous system, when shares were sold, the proceeds were credited to the accounts of their brokers before being remitted to the investors. The process was fraught with a number of pitfalls, such as delays in remittances, or even frauds and other forms of infractions. Many complaints were received from investors especially about delays and non-remittance of funds by brokers. Direct cash settlement has addressed these problems.

The e-dividend management system promotes a more efficient form of dividend payment to shareholders. Until recently, less than 20 per cent of investors had dividends posted directly to their accounts. But under the e-dividend, dividends are credited directly into investors’ bank accounts against the current system that relies on posting dividend warrants.

Zubair noted that the ease of dividend payment can significantly boost retail investor confidence, curb unclaimed dividend phenomenon and encourage more Nigerians to save and invest.

It should be recalled that from a peak of N12.6 trillion in March 2008, the stock market had suffered a setback arising from the global financial crisis, plummeting to N7.3 trillion by December 2008. Retail investors became apathetic to investment in the capital market. In order to restore their confidence, the National Investor Protection Fund (NIPF) was set and inaugurated by the SEC board. Several investors have benefited from the fund, which enabled them to get protection. The NIPF was incorporated in March 2012 with an endowment fund of N5 billion. The maximum amount which an investor can claim from the fund is N200,000.

The complaint management framework recognises the roles of capital market trade groups, operators and listed companies in dispute resolutions and encourages them to establish policies on complaint management. The framework ensures that complaints are resolved within the trade groups and only unresolved complaints can be referred to the SEC.

In order to improve corporate governance, SEC, in September 2008, inaugurated a National Committee chaired by Mr. MB Mahmoud (SAN) for the Review of the 2003 Code of Corporate Governance for Public Companies in Nigeria to address its weaknesses and to improve the mechanism for its enforceability.

The provisions of the code have now been made mandatory for all public companies. To assess compliance with its provisions, a Scorecard was developed by the Commission and launched in 2015 with the assistance of International Finance Corporation (IFC). The essence of this initiative was to improve corporate governance practices, thereby improving attractiveness and investment in securities of companies perceived to possess high corporate governance standards.

SEC also engaged with the Debt Management Office (DMO) in a process that led to Nigeria’s first issuance of a sovereign Sukuk in 2017. A SEC-DMO inter-agency committee worked out modalities towards achieving the milestone, with the Sukuk oversubscribed by 6.0 per cent. SEC has since also held numerous engagements with other agencies such as the Central Bank of Nigeria (CBN), National Insurance Commission ( NAICOM) and National Pension Commission (PENCOM) towards promoting and improving the acceptability of non-interest products.