AfDB, SEC Sign Agreement on Market Surveillance System Project 

Ndubuisi Francis

In a bid to modernise Nigeria’s capital market and ensure that it is well positioned to support economic transformation driven by private sector investment, the Securities and Exchange Commission (SEC) and the African Development Bank Group (AfDB) have signed an agreement for a grant on market surveillance system project.

With this, the bank is providing a $460,000 worth of grant to finance technical assistance and capacity-building for capital markets development under the ‘Nigeria Securities Market Surveillance System Project.’

Director General, African Development Bank Group Mr. Lamin Barrow said the grant from the Capital Markets Development Trust Fund (CMDTF),  a multi-donor trust fund administered by the AfDB and supported by the Ministry of Finance of Luxembourg and the Ministry of Foreign Trade and Cooperation of the Netherlands, will support the acquisition, installation and deployment of a real-time automated securities market surveillance system of the Nigeria capital markets. 

A statement from the SEC quoted 

 Barrow as saying: “Today’s ceremony marks yet another important milestone in our partnership and efforts to modernize Nigeria’s capital markets and ensure that it is well position to support economic transformation driven by private sector investment. 

“The introduction of a surveillance system will enhance oversight over securities trading across all existing and future trading platforms and all tradable securities and products by the SEC. It will therefore preserve securities market integrity, boost investor confidence and enhance financial inclusion, among other expected outcomes.”

According to him, to ensure sound implementation and sustainability, the design of the technical assistance project embeds training activities to strengthen the capacity of users of the securities market surveillance system, and the preparation of relevant operational manuals and workflow processing and document management for the surveillance solution. 

The AfDB Director General said the Bank’s support for the project derived from the Federal Government of Nigeria’s efforts to promote development of a competitive, deep and liquid capital market supported by an enabling regulatory environment that can efficiently mobilise resources from the nation’s fast-growing institutional investor base, the private sector and international capital to finance sovereign and corporate investment programs. 

“The technical assistance support builds on the SEC’s initiatives to strengthen the supervisory and regulatory framework as well as enhance market integrity and transparency under the Nigeria Capital Markets Development Master Plan 2015-2025, with a view to position Nigeria as an attractive destination for portfolio investments. 

“It also aligns well the Bank’s Country Strategy Paper for Nigeria 2020-2024 which recognizes the importance of a sound, well-regulated, resilient, effectively functioning and globally competitive financial markets in Nigeria for sustainable growth and development,” he said. 

Barrow stated that  at a time when economies are buffeted by global shocks, improving the attractiveness of capital markets to domestic and portfolio international investors is imperative for greater resource mobilization and building resilience to sustain Africa’s economic recovery. 

He said the pandemic had reinforced global risk aversion, prompting international investors to move their portfolios into safer assets and havens, expressing the desire to see the growth of the equities market well beyond the current N28.16 trillion underpinned by continued growth of the corporate bond market in Nigeria. 

In his remarks, the SEC Director General, Mr. Lamido Yuguda said the Commission was very pleased and thankful to AfDB for providing the grant support to execute the very important projects, particularly the project to acquire a surveillance solution.

Yuguda said a market surveillance system is required to aid the regulator in detecting and addressing market abuse as quickly and efficiently as possible and to proactively prevent major infractions. An automated market surveillance tool will enhance the Commission’s role in investor protection, as well as ensure a transparent, fair and orderly market and reduce systemic risk.

 According to him, “With the successful acquisition of a surveillance solution for the Commission, the SEC expects the following outcomes: The curtailment of market infractions; a modernised and technology driven regulatory approach which enhances the protection of investors; enhanced investor confidence leading to the increased participation of domestic investors (both institutional and retail) in the capital market.”

He said the surveillance solution would also aid an increased impact on gross domestic product (GDP) through the capital market’s role in the efficient intermediation and allocation of capital to the real economy to create jobs, encourage savings and facilitate wealth creation as well as increased investment in the economy through foreign direct investments and growth in the rate of domestic investor participation in the markets.

Yuguda disclosed that the SEC is currently implementing a comprehensive market and institutional reform programme intended to reposition the Nigerian capital market to be globally competitive and an attractive destination for investment activities in Africa.