IN a bid to position Nigeria’s capital market towards economic transformation driven by private sector investment, the Securities and Exchange Commission (SEC) and the African Development Bank Group (AfDB) have signed an agreement in Abuja today for a grant for a market surveillance system project.
The grant, valued at $460,000, is to finance technical assistance and capacity building for capital market development under the ‘Nigeria Securities Market Surveillance System Project.’
Speaking at the official signing of the agreement, the Director-General, AfDB, 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 for the Nigerian capital market.
Barrow said, “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.”
He stressed that 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.
He stressed further the Bank’s support for the project to promote the development of a competitive, deep and liquid capital market supported by an enabling regulatory environment that can efficiently mobilize resources from Nigeria’s fast-growing institutional investor base, the private sector and the international capital to finance sovereign and corporate investment programmes.
“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 positioning Nigeria as an attractive destination for portfolio investments.
“It also aligns well with 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 said at a time when economies were buffeted by global shocks, improving the attractiveness of capital markets to domestic and portfolio international investors had become 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.
He expressed his desire to see the growth of the equity market well beyond the current N28.16 trillion underpinned by the continued growth of the corporate bond market in Nigeria.
The SEC Director-General, Lamido Yuguda, expressed the Commission’s satisfaction with the AfDB for providing the grant support to execute important projects, particularly the project to acquire a surveillance solution.
Yuguda said a market surveillance system was 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.
Yuguda said the surveillance solution would also aid an increased impact on gross domestic product 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 increase investment in the economy through foreign direct investments and growth in the rate of domestic investor participation in Nigerian markets.
Yuguda disclosed that the SEC was implementing a comprehensive market and institutional reform programme intended to reposition the Nigerian capital market to be globally competitive, and to be an attractive destination for investment activities in Africa.
The 10-year Capital Market Master Plan (2015-2025) sets the vision, objectives and initiatives required to achieve that goal.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.