Challenges Facing New SEC Board

Kayode Tokede

posits that banking sector recapitalisation, unclaimed dividend, other reforms are some of the many challenges the new board of Securities Exchange Commission must tackle to sustain market integrity and growth amid domestic and global uncertainties

President Bola Tinubu on Friday, April 10, 2024 announced a new board for the SEC that include market technocrats, professionals, and stockbrokers who have over the years contributed to the capital market growth in Nigeria

The list include: Chairman, Mr. Mairiga Aliyu Katuka; new Director-General, SEC, Mr. Emomotimi Agama who replaced Mr. Lamido Yuguda; Frana Chukwuogor, Executive Commissioner (Legal and Enforcement) and Mr. Bola Ajomale — Executive Commissioner (Operations). Others are: Mrs. Samiya Hassan Usman — Executive Commissioner (Corporate Services); Mr. Lekan Belo — Non-Executive Commissioner and Mr. Kasimu Garba Kurfi — Non-Executive Commissioner.

SEC during the four years of Yuguda (appointed June 10, 2020), had no effective board to improve the commission’s governance to advance its core mandate of developing and regulating a capital market that is dynamic, fair, transparent, and efficient, to bolster investor confidence and contribute immeasurably to the nation’s economic development.

The removal of Yuguda came to market stakeholders as a shock amid House of Representatives Committee on Public Accounts 21-day ultimatum to the SEC and Fiscal Responsibility Commission (FRC) to reconcile the N45 billion unremitted operating surplus recorded from 2007 to 2021.

The FRC dragged SEC before the committee for not responding to the report issued in 2022, where N45.013 billion computed liability of unremitted funds was recorded against the SEC.

A representative of FRC, Bello Aliyu, told the committee that SEC had not made any attempt to reconcile the figure contained in the report.

He stressed that the balance of any operating surplus should be paid into the consolidated revenue fund of the Federal Government within less than one month of the statutory deadline for publishing any corporation account.

Yuguda, while reacting to the allegation, said the SEC had reconciled its operating surplus with the office of the Accountant General of the Federation (AGF).

“I think if the FRC had actually done a little more work, they would have seen from the OAGF all the efforts that we have made to reconcile the surplus figures from 2007 when FRSC came into being, “the former Director General told the Committee.

According to the report, a review of the documents submitted by the SEC to the committee reveals that they have actually made all submissions and payments and this was corroborated by the representative of the Office of the Account General of the Federation who also informed the Committee of the regular reconciliation exercise between it and SEC.

Demand for Yuguda’s Ouster

Aside from the SEC and FRC tussle, a capital Market Integrity, Transparency and Good Governance Group weeks ago wrote a petition to Tinubu demanding the sacking of the management team of SEC over what it described as the poor performance of the Nigerian capital market.

The Group is a member of the Civil Society Coalition on Sustainable Development (CSCSD), which is a coalition of over 2000 registered civil society and nongovernmental organizations committed to citizens’ empowerment, human rights protection, economic development and peace in Nigeria.

Also, the commission’s unit of the Association of Senior Civil Servants of Nigeria in a letter expressed concern about the commission’s recruitment exercise which they argued is a departure from the age-long Young Professional Programme (YPP) overseen by the hitherto Director-General, Ms. Aruma Oteh during which the best crop of employees were recruited.

The union who feared that what currently obtains is far from what it used to be stated that, “The union is aware that management is currently undertaking a secret recruitment exercise and has appointed a questionable committee to oversee the kangaroo exercise”.

In conclusion, the union expressed worries about the disposition of the former DG to his duties and responsibilities, stating that he is hardly ever in the office to attend to his duties.

It added, “The union has it on record that the DG had made over 10 foreign and several local trips this year at great expense to the commission and to the detriment of his duties and responsibilities.”

Current task for the new board

The board of SEC is coming in a year Central Bank of Nigeria (CBN) announced a new capital base for banks operating in the country.

On March 28, 2024, a momentous event unfolded in the banking sector when the apex banking regulating body issued a directive to financially reshape the domestic money banks (DMBs) theatre of competition.

In a direct memo, the regulator revised the capitalization requirements, setting new benchmarks for banks with international operations (N500billion), national licenses (N200billion), and regional licenses (N50billion).

This directive, a crucial step towards a stronger banking sector, initiated a time-sensitive two-year journey that will start on April 01, 2024, and end on March 31, 2026.

SEC in 2004, played a critical role in the banking sector recapitalisation reform as the key element of the reform was a prescribed minimum capital base of N25 billion for each bank.

The monetary authority also encouraged strategic mergers and acquisitions among the then existing 89 banks, which ultimately resulted in 25 consolidated banks with the least capitalized bank at the prescribed minimum capital base.

The ongoing reforms in the banking sector were also designed to reposition the Nigerian capital market for effectiveness and restore investors’ confidence, rather than cripple listed banks on the Exchange.

For effective regulation of the market, the new board at SEC is expected to apply various modern-day regulatory/supervisory tools, monitoring/inspection, investigation, enforcement and enforcing rule making for effective exercise.

Also, under Yuguda, the SEC successfully launched a new e-Dividend Mandate Management System (eDMMS), making it easier for investors to mandate their accounts for electronic dividends. The link to the portal can be found on the SEC’s website. Despite many efforts, the unclaimed dividend has failed to drop, creating room for mixed sentiments. 

Yuguda in 2023 reiterated that unclaimed Trust Fund established by the Government  would protect unclaimed dividends in the capital market.

“But, instead of allowing this fund to remain idle, this unclaimed fund trust fund is supposed to help in developing the country economically so that this will actually benefit both people who have this unclaimed dividend as well as other citizens who do not own them,” the former DG explained.

The current board at SEC will need to effectively update market stakeholders on the state of unclaimed dividend in the capital market, and how the government is utilizing it to grow economy.

Other key issues are: investors education, passage of the Investments and Securities Bill 2024 and the implementation of the Revised Capital Market Master Plan (RCMMP) remains ongoing, Identity Management, establishing a regulatory framework for the digital asset space, commodities trading ecosystem, among other task confronting the capital market.

Stakeholders’ optimism

Speaking with THISDAY, the former Chairman, Association of Stockbroking Houses of Nigerian (ASHON), Chief Patrick Ezeagu said capital market operators over the years have been advocating for main stream operators to be appointed into positions in SEC.

“The combination of the board at SEC is what operators have been advocating for a very long time. These are people who understand the capital market, and can develop it.  The FG listened to what we have been advocating for and I believe if the team is allowed to work without any political interference, they will give the market the best,” Ezeagu explained.

Another past ASHON Chairman, Mr. Emeka Madubuike stated that the new board constitutes major capital market players that understand the daily operations of the domestic capital market.

He said, “They have already experienced it, which gives rooms that will do what is right. The truth is that nobody can look into the future and predict what is going to happen. With the people that are appointed, there is a chance they will do what is right.

“The biggest challenges we have had in our country is that policymakers do not want to look at the two sides of our financial market- capital and money market. In every policy, you must create a balance. We believe that the new board at SEC will create a balance between the two markets because they have been in the system for so long and practised it. The appointment is in the right direction.”

 On his part, Investment Banker & Stockbroker, Tajudeen Olayinka, expressed that President Bola Tinubu made adequate consultations before making these important appointments.

He said, “For instance, Dr. Agama is a down-to-earth professional in capital market regulations whom I know to be more passionate about the well-being and orderly functioning of the capital market in Nigeria. I have had cause to relate with him on some aspects of the market, and can tell you here that those who like to see remarkable progress in the capital market will enjoy him.

“He’s quite conversant with different stages of development in the market and will have no difficulty deploying appropriate resources to deal with challenges that may confront the market during his tenure as Director General of the Securities and Exchange Commission. Mr. Bola Ajomale, Lekan Bello and Garba Kurfi are all experienced capital market operators who should be able to provide a proper blend that will make the market function in the overall interest of all stakeholders.

“Ajomale, the new executive commissioner in charge of operations, was the immediate past MD/CEO of NASD OTC Exchange, while Lekan Bello is a stockbroker and one-time commissioner of finance in Ogun State. Alhaji Garba Kurfi from Katsina State, comes with a unique touch of some important aspects of capital market operations in Nigeria: Fixed Income, Equity, Commodities, and Derivatives Trading.”

He added, “I feel strongly that better days lie ahead for the Nigerian capital market. I therefore wish to congratulate all the new board members of SEC for a well-balanced appointment of experts into the board of the Commission.”

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