Concerns Mount over Lack of Board for SEC

Goddy Egene

Operators in the Nigerian capital market have continued to express dissatisfaction over the prolonged delay by the federal government in reconstituting the board of the Securities and Exchange Commission (SEC), almost three years after the previous board was dissolved.

The operators stressed that in order to ensure improved regulation of the market as well as the attraction of more investments into the economy, there was need to inaugurate a board for the commission.

They argued that the evolvement of any economy significantly depends on a vibrant capital market.

While the Nigerian capital market has very huge potential for companies to raise funds to finance their operations, patronage has been low due to the fact that many investors, especially foreign ones, have stayed away in recent times.

Some investment bankers, who spoke to THISDAY, pointed out that while the Nigerian equities market offers investors good value and remains a source for both the government and private sector to raise significant capital, many investors are discouraged by what they term ‘weak’ regulation because of the absence of board for SEC for almost three years.

For most part of last year, the then Director General, Mr. Mounir Gwarzo, operated without the support of executive commissioners before his suspension by the Federal Ministry of Finance over alleged financial impropriety last November.

Also, Dr. Abdul Subair was appointed in acting capacity until last April when he was removed and Ms. Mary Uduk was appointed as the acting DG of the capital market regulatory body.

Three acting executive commissioners: Reginald Karawusa (Legal and Enforcement), Isiyaku Tilde (Operations) and Henry Rolands Adekunle (Corporate Services) were also appointed then by the Minister of Finance, Mrs. Kemi Adeosun, to support Uduk.

But an investment banker, who has been interfacing with both foreign and high net worth investors over the years in the market, told THISDAY Tuesday that if the capital market does not operate efficiently, there is no way the government and other corporates can raise money to grow the economy.

“We are talking about financing the budget, we are talking about infrastructure projects, all these are better sourced from the capital market. But I can tell you that while the Nigerian market has potential to provide significant part of the funds, most investors are still reluctant to bring their money because they believe the absence of a board for SEC is highly discouraging,” he said.

A senior stockbroker, who also spoke on the condition of anonymity, pointed out that the commission had been talking about ensuring good corporate governance in the market and yet, does not have a board.

“The sanctity of the market is dependent on our governance. For the international community to see us as being serious, we must be seen to have a structure in existence and if we do not have a structure what is the moral justification to ask others to have structures. With good structures international community will be assured of accountability and transparency in our financial system,” the broker said.

The operator added that without a board, any joint action SEC is having with other regulatory bodies in the financial system cannot be firm because most action taken by people on acting capacities are not regarded to be very strong and committed.

“Once you do not have a board, then there would not be any basis to plan because you cannot be futuristic. You will be afraid that today or tomorrow there can be any change. So, if you want consistency, permanence in the institution you must have a board.

“There is no nation that want to progress that does not take into congnisance the structure, strength and viability of the capital market regulator.

“Take for instance, United States SEC board was among the very set of appointments President Donald Trump made in order to gain the confidence of investors that their market is properly regulated. So it is very imperative that the federal government stop to delay to constitute a board for SEC.

“A substantive board will give further moral to the current executives to put in more efforts for the growth of the market,” the broker said.

While reacting to the appointment of Uduk last April, a shareholder and member of Independent Shareholders Association of Nigeria (ISAN), Moses Igbrude, had said: “Now that the minister has also appointed three commissioners with Uduk as DG, they must work hard to restore investors’ confidence. But the minister should go a step further by prevailing on the federal government to constitute the board of SEC.”

Similarly, the Chairman of Ibadan Zone Shareholders Association of Nigeria (IZSAN), Mr. Eric Akinduro, said the international community was watching and the more the delay in the appointment of a board, the more it would affect confidence in the market.

“The apex regulatory authority should be able to show example to others. The market is very sensitive. Anything that is not positive can easily drag the market down. Therefore, the best thing for the government is to take proactive step by ensuring that the board is constituted,” Akinduro said.

In the opinion of the National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Mr. Adeniyi Adebisi, people bearing the brunt of what is happening in SEC are the shareholders.