Capital Market

DIGNITARIES LED PRESENTATION OF A FINANCIAL MARKET GUIDEBOOK TO THE PUBLIC

FINANCIAL INTERMEDIATION: Operations and Practice, is a guidebook for financial market operators and practitioners recently published by Mindscope Africa. The author of the book is Seye Adetunmbi, the Chief Responsibility Officer of Value Investing Limited and the convener of Capital Market Roundtable in Nigeria. The book has been commended by professionals and stakeholders in the market that have gone through the first of its kind book. Apart from the remarkable foreword written by Mr Atedo Peterside, here are some comments that underscore the relevance of the book. 

QUOTE

"This is very good. It's like a reference manual, textbook and personal account rolled into one. It may easily pass as a "Guide to Investment Banking in Nigeria. Kudos!!” - Bolade Oyebolu FCA

    “Another excellent and detailed book by Seye Adetunmbi. The book is good as a practitioner's guide and also as reference manual. A well researched book to satisfy other professionals in the capital market. Well done” - Otunba Akin Osiyemi

    "It is indeed a book on the theory and practice of Financial Intermediation with special reference to Nigeria. Full of practical examples and relevant historical details, it will be a useful handbook for  students and experienced  operators of the financial market" - Banji Ogungbemi

UNQUOTE

 The zoom presentation of the book to the public was scheduled to hold on July 21st, 2020 at 2:30 pm. The unique book and first of its kind in the history of Nigerian financial market was reviewed by Mr Bola Ajomale, the Managing Director of NASD PLC.

    The Chairman of the zoom presentation was Dr Alimi Abdulrazaq, the Chairman of Forte Oil -Upstream Services Limited while Mr Atedo Peterside, Chairman of ANAP Foundation, Dr. Uduimo Justus Itsueli, Chairman of Dubril Oil Limited  and His Excellency, Alhaji Abdulrahman Abdulrazaq, the Governor of Kwara-State were the Special Guests of Honour. The Chief Presenter of the Book was Chief Dele Fajemirokun, a distinguished entrepreneur of international repute. The Lead Presenters  included Senator Ibikunle Amosun, Chairman of National Assembly Committee on Capital Market; Mr. Kayode Alabi, Deputy Governor of Kwara State and Mr Gboyega Alabi, the Deputy Governor of Osun State. Other special guests at the book launch were Alhaji Lamido Yuguda, the Director-General of the Securities and Exchange Commission (SEC), Ms Yewande Sadiku, the Director-General of the Nigerian Investment Promotion Commission, Mr Oscar Onyema, the Chief Executive Officer of Nigerian Stock Exchange, Ms Arunmah Oteh, onetime Director-General of SEC and Mr Tunde Amolegbe, President of Chartered Institute of Stockbrokers.

SEC AND 10-YEAR MASTER PLAN IN PERSPECTIVE 

By, Seye Adetunmbi

The recently constituted board for the Securities and Exchange Commission  (SEC), chaired by Mr. Olufemi Lijadu, has one of them, Alhaji Lamido Yuguda assuming duty as the Director-General of the apex regulatory body for capital market in Nigeria. Other members of the board who are non-exec Commissioners are Rekiya Ladi, Okokon Ekanem Udo - Representing Ministry of Finance, Angela Adewumi Sere-Ejembi- Representing CBN while the Executive Commissioners include Henry Rowlands, Isyaku Tilde and Reginald Karawusa.
   Alhaji Lamido Yuguda is a brilliant professional with a remarkable work experience in the financial market. He is up to the task before the new administration under his executive leadership.

    One can see the 10-Year Master Plan for  the market to be on course with the new administration. The 2015 to 2025 Capital Market Master plan was developed by stakeholders as a roadmap to position the capital market as an enabler of accelerated development of the Nigerian economy.

    The over 100 initiatives associated with the Master Plan was built around four strategic pillars namely the need to drive and facilitate capital raising for sustainable national development and transformation of Nigeria’s key economic sectors. Its effective implementation is expected to contribute to growth in the market. After the launch of the Master Plan in 2014 SEC has been determined to align market structure to the needs of Nigeria’s economy while increasing scope, scale, size and professionalism among the stakeholders.

It is expected that SEC will continue to promote fair competition by instituting best practices that will improve transparency, efficiency and liquidity, while at the same time attracting sustainable interest in the capital market from domestic and foreign investors, in addition to boost enthusiasm among the operators and practitioners who remain passionate about the market.

    The fundamental function of SEC as the apex capital market regulator continues under the new leadership. This complements the master plan that seeks to create an enabling operating environment and facilitate oversight and regulatory framework that will support the deepening and development of the market for the benefit of all, including the desired national agenda for Nigeria’s economic growth and development.

   The successful dematerialization of share certificates and payment of dividends electronically into the bank accounts of their beneficiaries is commendable. This was part of the contents of the Master plan for implementation. It has really made life easy for all ranks of investors that have consummated the dematerialization process.

  The Direct Cash Settlement had since been operational to protect investors from funds diversion. The instituted process ensure that the proceeds from share sales are credited directly into the client’s account, rather than that of the stockbroker. This is highly commendable and good for the market.

   Apparently, the e-Dividend process is work in progress. With the successful implementation of the electronic Dividend Mandate Management System (e-DMMS) which was launched in November 2015, there are no new incidences of unclamped dividends. Nevertheless, it is imperative to ensure the legacy amounts are paid to their owners before they become statue barred. The unclaimed dividends in the capital market according to SEC stood at N153bn as at the end of January 2020.

  A well structured and guided vibrant commodities trading market is in the horizon, it is expected that Commission will continue to collaborate with relevant stakeholders to deliberate on areas that will showcase and unlock Nigeria’s potentials in the commodities market globally.

   The approved regulatory framework for the introduction of financial market  derivatives is the way to go. It points to the direction of more product development in Nigeria. Consequently it can help in risk management, portfolio diversification, market depth and liquidity.

    In a dynamic economic environment, it is imperative to be creative as a going concern. Just as operators are expected to be innovative or go under or be confined to the rear, the regulators must be prepared for the trends and pace in the market space. This makes it cheering to know that SEC is committed to leverage opportunities in Financial Technology (Fintech). The launched Fintech Roadmap for the Nigerian Capital market is bound to enhance efficiency, introduce new products and new platforms as well as supporting development of technology start-ups

In our modest way, we in the Capital Market Roundtable (CMR) will continue to interrogate issues concerning the market in our interactive platform. Past and present top management staff of SEC are part of us to track deliberations and feedback from operators and other capital participants. Having access to informed insights of a wide range tested capital market professionals is the primary motive behind the 12 years old CMR initiative. It is a humble act of giving back to the capital market that’s why retired technocrats are part of us. This we shall continue to extend to every administration of SEC, God being our helper.

On behalf of the CMR, I wish Alhaji Lamido Yuguda a fruitful tenure in office.

THE IMPERATIVES OF A GUIDED REGULATION FOR FOREIGN DIRECT INVESTMENT IN NIGERIA

By, Seye Adetunmbi 

The impact of Covid19 on the economy of most of the countries globally cannot be over emphasized. As at April 27th 2020, over 30 million Americans have lost their jobs due to ravaging coronavirus pandemic. Apart from the fact that the lockdown has caused distress among some companies in Nigeria, the 2020 budget has been rendered prostrate due to the economy that has suffered a setback from the collapse of the oil price globally. The reality today is that Bonny Light (Nigeria’s crude oil) traded below $11 per barrel, which is half the cost of producing a barrel. Even at this price, Nigeria could not sell her crude oil.  The nation has tens of millions of barrels of crude oil in scores of vessels cruising the seas looking for buyers. At some point, Nigeria offered more than $5 discount per barrel yet no prospect of sales. Why would anyone buy when U.S. shale oil sold for $2 per barrel and no one bought it either.

     The bigger picture of major concern is the implication of the global lockdown on virtually all the key sectors of the Nigerian economy. What we are experiencing now is loss of businesses; some companies will survive others will be forced to close down or sell their ventures. After the world has overcome Covid19, some of the formal sector players are going to be down for acquisition or takeover through Foreign Direct Investment (FDI) while the portfolio investment hawks around the world would be out to make a kill. The “rogue lions” are on the prowl to devour desperate companies and acquire distressed assets at the lowest price possible. The reality is that helpless key sector institutions have become vulnerable and may not have no other option than to cave-in at any offer made to them for their equity shares or debt buyout which practically will cause them to let-go control over their establishments.

      Nigeria shouldn’t wait until our situation degenerates to the level of an African country where the Chinese had to takeover the management of some government agencies due to inability to meet debt obligations. The statement credited to Warren Buffet is instructive in the prevailing circumstance: “Be fearful when others are greedy and be greedy when others are fearful”

      The news is in the public domain on how India, Germany, Spain, Italy, Australia and other countries have taken decisive steps to moderate incursion of FDI and hostile takeovers or outright acquisition of major businesses in their territories. In India as at today, its government has to give a nod before any major FDI transaction can be consummated.

       No doubt, we have more than enough laws guiding foreign investment policies in Nigeria. The challenge is how prepared or efficient are the gatekeepers in all the federal regulatory agencies to arrest “rogue lions” and halt FDI purveyors with hidden agenda? This is why this message is to call on the Federal Government of Nigeria to be proactively decisive and intervene with dispatch.

       Consequently, the National Assembly is hereby put on notice to complement the executive arm of the government with the appropriate legislation. There is need to quickly develop a fresh guideline for FDI and portfolio investors in Nigeria for the implementation of the Securities and Exchange Commission, Central Bank of Nigeria, Nigerian Investment Promotion Council and other relevant regulatory agencies. A well coordinated response to FDI in Nigeria becomes imperative. Until the situation is back to normal, make it mandatory for the presidency to have a nod to any major takeover through FDI in Nigeria before such major deal is sealed. 

       Tough guidelines become imperative for both direct and indirect investments be it stakes in existing ventures or fresh business initiatives. Critical situation requires critical thinking and critical strategic intervention. We have sufficient time to prevent avoidable and regrettable repercussion. Hence, Nigeria should not be caught napping. The time to act is now.