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Tag: CAPITAL MARKET

  • Capital market and infrastructure funding

    Capital market and infrastructure funding

    The Nigerian capital market has played catalytic roles in financing the private and public sector. The federal government’s ambitious 2025 budget rests majorly on enhanced macroeconomic reforms and the capital market. More than a quarter of the budget is expected to be generated through the capital market to bridge shortfall in revenue. Corporate capital raising had garnered some N3 trillion in 2024, including nearly N2 trillion raised by recapitalizing banks.

    The capital market provides the government with regular debt capital, including monthly debt issuances under the Debt Management Office (DMO). Capital market’s infrastructure financing comes in both direct and indirect ways. For instance, the federal government had raised significant capital by issuing six Sukuk to fund road projects across the six geo-political zones. The federal government had in 2017 launched its sovereign Sukuk issuance as a strategic initiative to support the development of critical infrastructure, promote financial inclusion and deepen the domestic securities market.

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    The Lagos State Government (LASG), Nigeria’s most active sub-national issuer, has also launched its N1 trillion Debt and Hybrid Instruments Issuance (DAHI) Programme. The net proceeds from the multi-tranches bond issuance would be used to finance priority physical and social infrastructure projects across the state.

    There are also many indirect private funding for infrastructure development. The Nigeria Infrastructure Debt Fund (NIBF), Nigeria’s first local currency-denominated infrastructure investment trust fund, is a multi-billion naira mutual fund that makes debt investments primarily in infrastructure projects in Nigeria.

    The fund, backed by major institutional investors, invests in several areas of the economy including transportation, power, education, telecoms and social infrastructure. It was launched in 2017.

  • Capital market key to transformative development, says Kwairanga

    Capital market key to transformative development, says Kwairanga

    • Applause for Arunma Oteh’s book

    The capital market is the main pillar for achieving transformative and sustainable economic development, Group Chairman, Nigerian Exchange Group (NGX Group) Plc, Dr Umaru Kwairanga, has said.

    Kwairanga spoke at the launch of a book written by former Director General of Securities and Exchange Commission (SEC), Ms Arunma Oteh at the Oxford University, United Kingdom.

    Reflecting on the book’s themes, Kwairanga pointed out the transformative impact of capital markets in fostering sustainable economic growth.

    Drawing lessons from the success of countries like China and India, he reaffirmed NGX Group’s commitment to enhancing financial inclusion and democratising access to investment through initiatives such as NGX Invest.

    He highlighted ongoing efforts to strengthen Nigeria’s financial ecosystem through financial literacy programmes, capacity development for market operators, and robust collaboration with regulatory bodies.

    Kwairanga commended Oteh for sharing her wealth of knowledge to inspire future generations and shape policy innovation, noting that the book: All Hands on Deck: Unleashing Prosperity Through World Class Capital Markets, provides invaluable insights into optimizing world-class capital market strategies.

    “Her publication represents a significant intellectual contribution to our collective understanding of global economic development,” Kwairanga said.

    He emphasized the critical importance of documenting and sharing professional expertise.

    Said he: “I strongly believe that our best leaders and professionals should share their insights and experiences both as a guide to our younger ones and for the sake of posterity”.

    Read Also: Tinubu tasks finance ministry on capital market growth

    Kwairanga highlighted Oteh’s distinguished career, which spans over four decades of leadership roles at the African Development Bank, SEC, World Bank, and her current position at Oxford University.

    He described the author as one of Nigeria and Africa’s most accomplished professionals.

    He noted that All Hands on Deck provides invaluable strategic guidance for policymakers, industry practitioners, and the general public on harnessing the potential of capital markets to drive equitable wealth creation.

    According to him, the launch of the book is a pivotal milestone in contemporary discussions on the role of capital markets in advancing economic prosperity, financial inclusion, and sustainable development

  • FG tasks finance ministry on capital market growth

    FG tasks finance ministry on capital market growth

    The Federal Ministry of Finance has been tasked by President Bola Ahmed Tinubu with spearheading efforts to create a robust capital market that drives economic growth and supports national development.

    This directive was disclosed by the Minister of State for Finance, Dr. Doris Uzoka-Anite, during a weekend meeting with the board of the Securities and Exchange Commission (SEC) in Abuja.

    Dr. Uzoka-Anite noted that the Tinubu administration is committed to leveraging the capital market as a key driver in achieving its economic agenda, including the ambition of growing Nigeria into a $1 trillion economy.

    “If we are to achieve the Renewed Hope mandate of a $1 trillion economy, it has to be through the capital market. It has to be private-sector-driven, and this private-sector drive is the capital market,” Uzoka-Anite said.

    She stressed the government’s resolve to strengthen the capital market to attract investors, enhance resilience, and restore investor confidence.

    “We are committed to strengthening the capital market to make it more robust and to ensure that investor confidence returns. That is one area where you need a lot of support, and I believe we can achieve it because it is fundamental,” she added.

    The Minister also assured the SEC board of the Federal Government’s unwavering support in enabling the Commission to fully realise its potential to drive economic transformation and wealth creation for Nigerians.

    In his remarks, the Chairman of the SEC board, Mr. Mairiga Katuka, described the meeting as a platform to strengthen ties with the Ministry of Finance in the interest of fostering a resilient and vibrant capital market.

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    He reiterated the importance of the capital market to the administration’s Renewed Hope Agenda, stressing that collaboration with the Ministry is vital for creating a policy environment conducive to sustainable growth.

    “The capital market is key to achieving the current administration’s Renewed Hope Agenda and harnessing its potential to boost national economic development,” Katuka said.

    He noted that the SEC is undergoing reforms aimed at elevating its status to world-class standards while urging the Ministry to support these efforts to achieve targeted outcomes.

    “Please be assured of the commitment of the Board of the Commission to support the Federal Government’s economic diversification and financial inclusion agenda,” he stated.

    Katuka also emphasised the SEC’s dual role of regulating and developing the market, which he described as crucial for attracting investments, creating wealth, and supporting national development objectives.

    He expressed confidence that sustained dialogue and collaboration between the SEC and the Ministry would promote growth and investor confidence in the Nigerian capital market.

    The meeting underscored the Federal Government’s vision for a resilient capital market as a catalyst for economic transformation, with stakeholders pledging collective efforts to achieve this goal.

  • Macroeconomic Review 2024… Capital Market

    Macroeconomic Review 2024… Capital Market

    Bullish headwinds

    Nigeria’s stock market is closing as one of world’s three best-performing markets in a year that saw the capital market as a sustained shining star in a sky clouded by several uncertainties. At home and abroad, the debt market was decisive in the national management, as reforms’ gaps moderated fiscal expectations. The recapitalisation in the banking sector enlivened the primary equities market, providing balancing stimulus for the debt market. But companies remained under pressure from hangovers of fiscal and monetary reforms. DEPUTY GROUP BUSINESS EDITOR, TAOFIK SALAKO reports

    The benchmark index for the Nigerian stock market opens today with average year-to-date return of 36.59 per cent, one of the three highest returns globally. With the stock market trading above its psychological mark of 100,000 index points and market capitalisation of about N62 trillion, pricing indices provide a summative view of the capital market in 2024.

    The All Share Index – the value-based, common index that tracks all share prices at the Nigerian Exchange (NGX), in its fifth consecutive positive return, underlines the positive sentiments that have characterised both the primary and secondary segments of the debt and equities markets. Amidst the tough-biting macroeconomic reforms, capital market indices have remained upbeat, a sort of alternative window that cushions the phasing pains of economic shifts.

    With more than N1.5 trillion estimated to have been raised by banks in the first cluster of the ongoing banking recapitalisation, successive oversubscriptions of the government’s debt issues showed a resilient market. But with government’s debt issue successes came with national debt build-up, with debt-to-Gross Domestic Product (GDP) overshooting by nearly 20 basis points.

    Nigeria’s first Eurobond in more than two years, a $2.2 billion, two-tenored, mid-to-long term instrument, was oversubscribed by 300 per cent, garnering more than $9 billion from a diverse global investors of fund managers, banks and other financial institutions. The global market was a replay of the domestic foreign investment inflows, in a year that saw a strong rebound across several segments of foreign inflows.

    Foreign portfolio investments (FPIs) more than doubled this year, supporting Nigeria’s market to its highest turnover. By November 2024, total FPI transactions stood at N785.28 billion, 116.5 per cent above N362.75 billion recorded in the comparable period of 2023. This, with the continuing bullish demand from the domestic investors, pushed total transactions at the equities market rose by 51.9 per cent by November 2024 to N4.91 trillion as against N3.23 trillion recorded in the comparable 11-month period in 2023.

    Besides, total inflows into the Nigerian foreign exchange (forex) market reached a new threshold of $4.05 billion by November 2024. The surge was particularly driven by inflows from foreign sources, which jumped to its highest level in nearly five years.

    Reports have shown increasing uptick in forex inflows with a successive monthly improvement. Total inflows rose from $3.04 billion in October 2024 to $4.05 billion in November 2024, representing an increase of 32.9 per cent. Nigerian Autonomous Foreign Exchange Market (NAFEM) data, obtained from the FMDQ Securities Exchange, had shown improved inflows from domestic and foreign sources, providing a steady mix for the stability and liquidity that have characterised the forex market in recent period.

    A breakdown indicated that inflows from foreign sources rose by 26 per cent from $1.36 billion in October 2024 to $1.71 billion in November 2024, its highest level since January 2020. The increase in inflows from foreign sources was driven by substantial inflows from foreign portfolio investors and other corporates, which rose by 39.9 per cent and 43.9 per cent respectively.

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    Inflows from local sources also rose by 38.5 per cent from $1.69 billion to $2.34 billion, driven by inflows from the Central Bank of Nigeria (CBN) and non-bank corporates, which rose by 27 per cent and 56 per cent respectively. Inflows from individuals and exporters however fell by 88.5 per cent and 63.5 per cent respectively.

    The ongoing banking recapitalisation shaped out to an early success, mitigating fears of any pronounced negative consequences. Nigeria’s premier and largest non-interest bank, Jaiz Bank Plc achieved the new minimum capital requirement stipulated by the Central Bank of Nigeria (CBN) after securing regulatory approval for a new N10.4 billion equity funds. With the clearance from CBN, Securities and Exchange Commission (SEC) and Nigerian Exchange (NGX), the listing of the N10.04 billion raised through a private placement pivoted the non-interest bank beyond the June 2026 deadline.

    Also, Access Holdings Plc successfully raised N350.96 billion to surpass the new minimum capital requirement of N500 billion stipulated for international commercial banking licence by the CBN. This followed full regulatory approvals from the CBN and SEC for the bank’s rights issue of 17.77 billion ordinary shares of 50 Kobo each at N19.75 per share. As at the third quarter 2024, Access Holdings had share premium and share capital of N251.81 billion. With the new equity funds, the company now has share premium and share capital of N602.8 billion, N102.8 billion above N500 billion stipulated by the CBN under the ongoing recapitalisation exercise.

    The CBN also approved the business combination between Unity Bank and Providus Bank, the first mergers and acquisition deal under the ongoing banking recapitalisation. This also highlighted other major mergers and acquisition deals in the market including Oando’s $783 million acquisition of the Nigerian Agip Oil Company (NAOC) from the Italian Energy firm Eni. The deal was adjudged ‘Deal of the Year’ by the Africa Energy Week (AEW) 2024, a recognition usually given to the most transformative and impactful deal in the energy sector. Seplat also concluded its acquisition of ExxonMobil, another highlight after the indigenous energy company that accounts for about 25 per cent of the country’s gas-to-power supply pulled a $1 billion turnover. The commissioning of Seplat’s ANOH Gas Processing Plant during the year was also a key driver for the performance of the oil and gas stocks, which are outrunning the global returns with average return of about 160 per cent.

    Access Holdings particularly recognised the impact of a digital innovation at the primary segment of the capital market. The launch of the NGX Invest, the electronic offering platform promoted by the NGX, during the year had considerable positive impact on the ease of offering at the market. The NGX Invest provides investors with a seamless, efficient, and convenient subscription experience, significantly reducing barriers and democratising participation in new issues.

    The new digital platform is at the core of NGX Group’s digital strategy designed to streamline the distribution of securities in the Nigerian capital market. Its user-friendly interface allows investors to onboard seamlessly and verify their identities through the Nigeria Inter-Bank Settlement System (NIBSS), using their Bank Verification Number (BVN). With NGX Invest, the traditionally complex and time-consuming process of investing is reduced to a few clicks, making it easier for investors across Nigeria, including those in underserved areas, to participate in the capital market.

    The reconstitution of the board of SEC by President Bola Tinubu appeared to have set a new tempo for capital market regulation. The new board and management of SEC included Mr. Mairiga Katuka, Chairman; Dr. Emomotimi Agama, Director-General; Frana Chukwuogor, Executive Commissioner, Legal and Enforcement; Mr. Bola Ajomale, Executive Commissioner, Operations; Mrs. Samiya Hassan Usman, Executive Commissioner, Corporate Services while Mr. Lekan Belo and Mr. Kasimu Garba Kurfi were appointed as Non-Executive Commissioners. For the new SEC management, the main thrust of the market is the $1 trillion economy agenda, with the capital market as the linchpin to achieve the ambitious national agenda.

    Three major listings highlighted the market’s continuing attraction, including the listing of Transcorp Power Plc, Aradel Holdings and Haldane McCall Plc. However, the delisting of GlaxoSmithKline Consumer Nigeria, Arbico Plc and Flour Mills of Nigeria, all voluntary delisting proved the underbelly of the market. Altogether, 2024 is a year of more wins than losses for the capital market.

  • New requirement for capital market operators

    New requirement for capital market operators

    Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC) has introduced ‘annual receipt of a trade group’ as a new requirement for capital market operators seeking to renew their registration.

    In a statement signed by Director of Registration, Exchanges and Market Infrastructure Department (REMI), Securities and Exchange Commission (SEC), Hafsat Rufai, the Commission warned that operators that failed to renew their registration could be banned from capital market activities.

    “This is to inform all capital market operators (CMOs) that the annual renewal of registration of CMOs for the year 2025 will commence on January 01, 2025. All CMOs applying for renewal of registration are required to include their 2025 annual receipt from their respective groups as part of their application.

    “In line with the Commission’s Rules and Regulations, all CMOs are to complete the process of renewal of registration for 2025, on or before January, 31, 2025. Note that CMOs without valid registration will be penalised and may be excluded from carrying out capital market activities,” SEC stated.

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    Chairman, Association of Securities Dealing Houses of Nigeria (ASHON), Sam Onukwue, commended SEC and urged market operators to take advantage of the new directive. 

    “It is a welcome development, and we duly commend the SEC for this directive. It will strengthen trade groups in their advocacy role as well as in promoting market transparency and professionalism, “ Onukwue said.

    Market watchers said the new requirement was aimed at promoting transparency, accountability, and professionalism in the capital market.

    According to them, SEC believes that registration with a trade group will help to ensure that capital market operators adhere to industry standards and best practices.

    Analysts noted that the Commission is committed to protecting investors and promoting the development of the Nigerian capital market.

    “This new requirement is an important step towards achieving these goals,” an analyst stated.

  • Capital market to resolve unclaimed dividends, others with new identification system

    Capital market to resolve unclaimed dividends, others with new identification system

    Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC) has said the resolution of identity management issues would help reposition the Nigerian capital market for greater potential.

    Director General, Securities and Exchange Commission (SEC), Dr. Emomotimi Agama said the identity management system currently being developed by the market will tackle the lingering identification issues.

    He spoke in Lagos at a workshop on identity management for the capital market.

    Agama emphasised  that identity management issues when solved will provide lasting solution to the issue of unclaimed dividends, reduce the barriers of entry to the  market and make the market more attractive to the youth segment whose participation is currently very low.

     He said that the aim of  workshop  is to bring together stakeholders and industry players to discuss and seeks ways of addressing the lingering issue of identity management in the capital market.

    These issues, he said, have plagued the market for a while, contributed to the increasing quantum of unclaimed dividends which seem to have defied all efforts to stem over time, and negatively affected the attraction and competitiveness of the market.

    He said “In view of the promise to stem this undesirable trend going forward, the Commission is very passionate about this initiative because its success would portend great potentials for our market.

    “This journey began in the year 2018, following discussions at the 3rd Capital Market Committee (CMC) meeting of the year, on the need to address legacy identity management issues in the market.

    The Securities and Exchange Commission, therefore in January 2019, set up an in-house committee on the subject. The Committee was tasked with identifying issues surrounding identity management in the market, engaging with relevant stakeholders to document and proffer solutions, and make recommendations to Management.

    Agama said that in a report submitted by the in-house Committee to Management, it stressed the need to consolidate investors’ data and seek ways and means to finding a lasting solution to this monster plaguing the market.

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    Following the recommendations of the Committee, the SEC DG said the Commission, in 2021, dissolved the in-house Committee and set up a market-wide and bigger Committee,  to undertake a more intensive study of the depth of the Nigerian identity crisis , and more specifically, in the capital market and articulate actionable and measurable solutions to the lingering issues: harmonise the various databases of investors in the capital market with a view to engendering data accuracy, and addressing the absence of a central repository of investors’ data for the entire spectrum of the Nigerian capital market.

    According to him , “The Committee, graciously chaired by Mr. Aigboje Aig-Imoukhuede, has its membership drawn from leading market players and institutions across the Nigerian capital market ecosystem, including the chief executive officers of Nigerian Inter-Bank Settlement System (NIBSS) Plc and the National Identity Management Commission (NIMC).

    “In the course of its work, the Committee engaged the services of Ernst and Young (EY) as consultants to assess the current state of the capital market identity management system, undertake a cross-jurisdictional peer review and develop a future-state identity management framework for the Nigerian Capital Market. Here at the workshop today, EY would be providing insights into the research undertaken on our market vis-à-vis other jurisdictions and proffer solutions to our identity management challenges.

    He stated that the postulations and recommendations of EY shall be the subject of deliberation for all stakeholders at the workshop which is hoped to assist in proffering a lasting solution.

    In his remarks, Chairman of the Committee, Mr.  Aigboje Aig-Imoukhuede said the work of the committee will assist capital market operators elevate their performances and commended the SEC for its suppose to the committee.

  • ‘Fed Govt can raise $500b from capital market’

    ‘Fed Govt can raise $500b from capital market’

    The capital market can generate up to $500 billion to support the attainment of the $1 trillion agenda of the President Bola Tinubu’s administration.

    President, Chartered Institute of Stockbrokers (CIS), Mr Oluropo Dada at the weekend, said the capital market is ready to make pivotal contribution to the achievement of the $1 trillion economic target of the government.

    Dada spoke at his investiture ceremony as the 13th President and Chairman of Governing Council of CIS at the weekend in Lagos. The ceremony also marked the send-off for Mr Oluwole Adeosun, the immediate past president.

    He noted that in order to attain the $1 trillion economy agenda, the economy must attain a double-digit growth in Gross Domestic Product (GDP).

    “It is, therefore, my conviction that the capital market alone can generate up to at least half of the envisaged $1 trillion. It is, therefore, imperative that the size of the informal sector in Nigeria be substantially reduced, if we are to attain the objectives of accelerated GDP growth.

    “Appropriate policies should be crafted to encourage all public limited liability companies in Nigeria to obtain listing and public quotation on any of the Securities and Exchange Commission (SEC)-registered securities exchanges in the country,” Dada said.

    He reaffirmed the commitment of the stockbrokers to supporting the ongoing recapitalisation programme in the banking sector, noting that the institute had made recommendations to the government and capital market regulators on how the new capital injection in the banking industry can be implemented seamlessly.

    “My vision is to build a Nigerian capital market in which securities professionals get the attention and patronage that they deserve. We want a market that is all-inclusive, with all stakeholders working as partners. My team and I will work assiduously towards upgrading capacity building in our community, while at the same time ensuring that there is a symbiotic relationship between securities dealers and all trading platforms in the country,” Dada said.

    Adeosun presented some of the major achievements during his tenure and commended Dada for his sterling contributions as the 1st Vice President during the period.

    Special Guest of Honour, Vice President, Kashim Shettima, urged the institute to partner with the Federal Government in order to transform the economy.

    Shettima, who was represented by his Special Adviser on Economic Matters, Dr Tope Fasua, explained that the economy would experience significant growth once the country overcomes the ongoing reforms.

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    Governor Abiodun Oyebanji of Ekiti State, commended the institute and assured it of support for Dada’s administration through partnership with the institute for market development.

    He described Dada as a man of integrity with track records of performance.

    After the swearing-in of Dada as the President, in line with the tradition of the institute, Dada sworn in Mrs Fiona Ahimie and Dr Akeem Oyewale as the 1st and 2nd Vice President respectively.

    Goodwill messages were presented to the new president by the Lagos State Governor, Director General, Securities and Exchange Commission (SEC), Nigerian Exchange Group Plc, Chartered Institute of Bankers of  Nigeria (CIBN), Association of Securities Dealing Houses of Nigeria (ASHON) and Founding Partner, Wole Olanipekun & Co, Chief Wole Olanipekun amongst others,  while a keynote address was delivered by the Chairman, Chapel Hill Denham, Mr Bolaji Balogun.

  • New digital platform for rights, public offers to transform capital market

    New digital platform for rights, public offers to transform capital market

    •E-offering boost for $1tr economic agenda

    Existing and new investors will in the next few weeks be able to buy into rights issue and public offers by clicking few buttons on their mobile devices, under a new seamless digital platform that aims at transforming issuances at the Nigerian capital market. 

    Banks and other companies seeking to raise new equity funds from the Nigerian capital market will now be able to fully conduct such issuances through a fully digitized platform that allows paperless subscription and ownership of shares.

    The Nigerian capital market undertook a preview of a digital platform for electronic offering of shares (e-offering) yesterday, with the Securities and Exchange Commission (SEC) and Nigerian Exchange (NGX) describing the forthcoming platform as a major transformation for the Nigerian market and the economy generally.

    While awaiting the final approval of SEC, the apex capital market regulator, the e-offering platform being championed by the NGX, will deepen participation in the Nigerian capital market through a seamless access to offers anywhere in Nigeria and globally.

    Director General, Securities and Exchange Commission (SEC), Dr. Emomotimi Agama, said the e-offering is digital transformation for the market, a testament to shared commitment by the regulators and market operators to fostering an innovative, efficient, and reliable capital market, as embedded in the capital market masterplan.

    According to him, by leveraging technology, the market will be able to attract the younger generation of investors, enhance regulatory oversight and create a world-class market.

    “This digitisation will play a crucial role in setting a new standard for capital raising in Nigeria and enable the capital market support the achievement of the $1 trillion economy target of the current administration,” Agama said, at a press briefing and stakeholder engagement session held at the Nigerian Exchange Group House yesterday in Lagos.

    Group Chairman, Nigerian Exchange Group (NGX Group), Alhaji Umaru Kwairanga, said the new digital platform is part of the Exchange’s strategy to expand the market and attract a wider range of investors.

    “Our initiative stems from recognising the need for a more efficient, transparent, and inclusive process in capital raising. It represents a significant step towards modernizing our market operations and enhancing accessibility for issuers and investors alike,” Kwairanga said.

    He noted that the innovative platform represents a significant advancement in digitising the capital raising process for companies raising funds.

    He outlined that stakeholders are expected to benefit from enhanced efficiency, streamlined due diligence capabilities, ease of use and accessibility, faster information dissemination, and seamless compliance with regulatory requirements, among other features.

    Group Managing Director, Nigerian Exchange Group (NGX Group) Plc, Temi Popoola, said the platform marks a pivotal moment in the evolution of the Nigerian capital market.

    He said the NGX, with the support of the regulator and other stakeholders, has developed an end-to-end digitised market infrastructure platform for distributing financial products, in this case public offers and rights issues.

    “I can assure the investing public that robust payment systems, comprehensive Know Your Customer (KYC) protocols, and strong fraud and risk management measures are fully integrated, also ensuring standard capital market intermediation is upheld without compromise,” Popoola said.

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    According to him, the digital platform aims to boost retail participation in the capital market, promote financial inclusion, and further deepen the pool of available capital.

    As banks seek to meet their updated minimum capital requirements through the primary markets, SEC and NGX Group have pledged to ensure an end-to-end streamlined process to assist banks and other issuers in achieving their business goals.

    Market analysts commended the collaborative effort between SEC and NGX Group, describing it as a significant step forward in the modernisation of Nigeria’s capital market infrastructure as it promises to enhance efficiency, transparency, and accessibility for all market participants.

    With the banking recapitalisation exercise underway, banks are expected to be the first beneficiaries of the new e-offering platform, which is designed to allow banks and other financial platforms to link up to the e-offering platform, thus providing people with multiple access to the marketplace. As such, banks’ customers with mobile banking devices can easily buy shares while conducting their normal banking transactions.

    Banks are expected to raise about N5 trillion in a new recapitalisation exercise launched in April 2024.

    The Central bank of Nigeria (CBN)’s circular on review of minimum capital requirement for commercial, merchant and non-interest banks had increased the new minimum capital for commercial banks with international affiliations, otherwise known as mega banks, to N500 billion; commercial banks with national authorisation, N200 billion and commercial banks with regional license, N50 billion.

    Others included merchant banks, N50 billion; non-interest banks with national license, N20 billion and non-interest banks with regional license will now have N10 billion minimum capital. The 24-month timeline for compliance, which started on April 1, 2024, ends on March 31, 2026.

  • Katuka and the redemption of capital market

    Katuka and the redemption of capital market

    By Gidado Shuaib

    With the recent appointment of Mallam Mairiga Aliyu Katuka, a long-standing insider in the financial services sector, as the Chairman of the Securities and Exchange Commission (SEC), by the Tinubu administration, there is the very huge hope that many of the issues bedevilling the sector will be contained, if not permanently laid to rest.

    As Nigeria’s leading financial market regulator, the Securities and Exchange Commission’s board that is now led by Katuka, also has Mr Emomotimi Agama as its director-general, and it has evolved over the years since its establishment in 1962, as an arm of the Central Bank of Nigeria. The Commission, which was chartered by the Investments and Securities Act No 45 of 1999, had initially been known as the Security and Exchange Commission in 1977, before becoming the Securities and Exchange Commission by virtue of SEC Decree No. 71 of 1979.

    Mallam Mairiga Aliyu Katuka, who was with the Central Bank of Nigeria (CBN) for over three decades, rising to the height of a director in the apex institution, the experiences of which helped secure his sound credentials as an accomplished executive in central banking and financial management, is a major player in the country’s financial landscape. These are experiences he will bring to bear on his newer remit in SEC. Notable for his leadership and team-building skills, Katuka is well versed in financial analysis, budgeting, and investment management, which are core areas of his expertise.

    The jury has been out and a bit vocal on many of the problems considered as afflicting the Nigerian capital markets, now directly under Katuka’s oversight, as including issues of inadequate regulation, the lack of transparency and accountability in much of the financial dealing, low investor confidence and participation, and insider trading coupled with market manipulation.

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    In addition to the foregoing, there have equally been the concerns around limited financial inclusion and access of small and medium-sized enterprises to the capital markets, alongside other marginalised groups, and political interference, in tandem with weak structures of corporate governance, etc.

    Hence, at this point, there is the resurgence of expectations that much of the desirable reforms to the capital markets by the Securities and Exchange Commission, would find adequate consideration and expression with the incoming of the Mallam Mairiga Aliyu Katuka leadership. These include the strengthening of the regulatory framework to enhance transparency, accountability, and enforcement; and the greater push for the independence and autonomy of the SEC to whittle down political interference.

    Saliently, there is greater hope for the protection of the rights and interests of investors; the implementation of technological upgrades to enhance the work of the Commission; capacity-building and welfare provisioning for the staff; the strengthening of enforcement and imposition of effective sanctions for non-compliance to the Commission’s regulations, among others.

    In Katuka’s plans for the commission, he regards human resource development as critical, as he noted that: “We are already working on strategic plans for the capital market. To achieve these plans, we must have reliable manpower, and that’s why we are not going to overlook the manpower we have. Manpower is essential for achieving our goals. So, the greatest resource we have is human resources.”

    And, in terms of reforming the SEC towards better performance, for Katuka, investor confidence in the Commission’s operations is very critical. As he put it, “building investor confidence means ensuring that the market is transparent, dynamic, and fair, so investors can invest without fear. We aim to create the credibility and integrity needed to restore investor confidence. We will also engage stakeholders, as their participation is crucial to our strategic plans.”

    Born on 15 February, 1961 in Keffi, Nasarawa State, Mallam Mairiga Aliyu Katuka obtained a Higher National Diploma in Accounting from Federal Polytechnic, Bida, in 1985, after which he received a Master’s degree in Business Administration from Ahmadu Bello University in 2007. He has earned numerous professional qualifications and certifications, and is a Fellow of the Certified National Accountants of Nigeria (FCNA), while holding the membership of bodies including the Nigeria Institute of Management (MNIM) and the Chartered Institute of Forensic and Certified Fraud Investigators of Nigeria (CCrFA).

    Katuka commenced his career as an Assistant Executive Officer in Accounts at the Public Complaints Commission in 1982; and he became a Higher Executive Officer in the Police Pay Office, Bauchi, as a staff of the Federal Ministry of Finance in 1987, following his National Youth Service at Esie-Iludun Grammar School in Kwara State.Having resumed at the Central Bank of Nigeria in 1990, Mallam Mairiga Aliyu Katuka steadily rose to increased responsibilities across the portfolios of budget and investment management, financial forecasting, and internal controls. 

    While, over his 31 years in the bank he served as the Secretary of CBN’s budget Committee and member of several key panels, he was equally known for being an active participant in the implementation of the Bank’s Oracle ERP application.

    A life-long learner who is currently a PhD student of financial sector regulations at the Institute of Capital Market Studies at the Nasarawa State University, Keffi, Katuka has attended numerous prestigious capacity-building programmes in Leadership, Creativity and Peak Performance in Dubai (2021); Advanced Governance, Risk Management and Compliance in London (2019); and Corporate Financial Planning, Budgeting, and Control in London (2016), etc. These programmes have enabled his proficiency in governance and strategic financial management.

    He is one who cares deeply about community service, whether in his work or natal environments, hence his years of service as President of the CBN Staff Co-operative Society, on the Board of Directors of Keffi Community/Microfinance Bank from 1998 to 2016, and as a significantly contributing member of the Keffi Development Foundation.

    One hopes that as he steadily takes on and navigates the reins of leadership in the SEC, his would be a period of renewal and the ascendance of the mandate of the Commission as a durable institution of greater public service and relevance. He professed as much in his observation, that:“One issue we have observed is the low awareness of SEC activities. This is an area we will focus on, ensuring Nigerians understand the functions of SEC. Not just in Abuja, Lagos, Port Harcourt, and Kano, but nationwide. SEC will help people understand the importance of the capital market and the benefits of investing in it. We are also working on financial inclusion. In this modern era, technology is integral to everything we do. As times change, we need to adapt. We plan to make our IT robust to accommodate our goals.”

    Gidado Yushau Shuaib, a media and communications expert, can be reached on giddyshuaib@gmail.com.

  • Wanted: leading roles for capital market solicitors

    Wanted: leading roles for capital market solicitors

    Experts have called for a leading role for solicitors in the drafting and execution of capital market contracts.

    They made the call at the 2024 Annual Business Summit of the Capital Market Solicitors Association (CMSA).

    Its theme was: “Revolutionising the Nigerian capital market through innovative financial instruments for sustainable development.”

    The summit focused on transforming Nigeria’s economic landscape through strategic financial innovations.

    It featured a fireside chat with Partner, Financial Advisory Practice, Deloitte West Africa, Akinola Akinboboye (interviewee) and Senior Associate, Capital Markets and Fintech Practice Groups at Templars, Victor Sameria.

    The first panel session was moderated by the Managing Director of Investment Banking at Chapel Hill Denham, Kemi Awodein.

    It featured Managing Director, One17 Capital, Attahiru Maccido; General Counsel, InfraCredit, Shadrach Iguh; Senior Manager, Capital Markets and Accounting Advisory Services, PwC Nigeria, Elizabeth Ekpo and Executive Director, Lotus Capital Limited, Moshood Babatunde.

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    The second session was moderated by the Founder/Executive Vice-Chair of Emerging Africa Group, Toyin Sanni.

    It featured ex-Partner, Global Sustainability at Ashurst LLP, Anna-Marie Slot; Special Adviser to the President on NEC and Climate Change, Office of the Vice President, Rukaiya El-Rufai and Managing Partner, Pentagon Partners, Kanayo Okoye.

    Director-General of the Securities and Exchange Commission (SEC), Dr Emomotimi Agama gave the keynote address.

    He said the times of the “armchair capital market are over” and urged lawyers to take their place.

    Dr Agama noted the key role lawyers play in the capital market, saying they constitute over 40 per cent of the operators.

    He urged them to negotiate for improved fees, saying: “It is the way you dress that you are addressed.

    “Are you ready to accept liability by signing off on a contract? It (fee) is a subject of negotiation.”

    He said the SEC would continue to rely on lawyers in developing its rules, as no regulator knows it all.

    “The regulator is open to receiving ideas,” he said.

    CMSA Board of Trustees Chairman, Chief Anthony Idigbe (SAN), told reporters why solicitors should assume more prominence in the capital market.

    According to him, those who bring the funds to the market (capital surplus entities) rely on prospectus, financial statements and audited accounts for information about businesses.

    He noted that when a piece of information is inaccurate, the person who brings the money suffers a loss.

    “So, at the bottom of the capital market is the allocation risk and compliance to ensure that information is correct.

    “It is the lawyer who plays the role of presenting the right information through the prospectus and other documentation.

    “But, over time, the thinking seemed to be that the most important person is the one who brings the person to buy the shares, that is, the person bringing the capital surplus entities to the market. So, they started ignoring the lawyers.

    “Many such entities, such as investment houses, started employing in-house lawyers who prepare the documents.

    “All the external counsel was expected to do was append his signature. And so, they diminished the role of the lawyers, unfortunately.

    “But when it comes to liability, the in-house counsel is not held liable, and the investment house will say it didn’t give legal advice. The risk is still on the external counsel.

    “What we’re trying to do is to take it back to the original concept, which is what happens globally.

    “The lawyer is in the middle of such transactions because they’re legal transactions.

    “Therefore, the solicitors should be compensated appropriately and not minimised as has been the practice.”

    On the theme of the summit, Idigbe noted the sustainability issues in the capital market.

    He said the people with capital surplus are increasingly concerned about where their investment is going and what it is used for.

    “They’re demanding that it should be used for projects that are sustainable or can be held forever, as it were, and that are not damaging but are positively impacting the environment.

    “Because those with a capital surplus are making such demands, the capital deficit people who need the funds have to make sure their projects are sustainable.

    “That way, the capital market will also be sustainable,” he said.

    CMSA Chairman, Vincent Iweze, said lawyers will continue to occupy a front row in the capital markets.

    “As lawyers, we’re just trying to ensure that we take our rightful place.

    “Most documentation in the capital market is legal, and we must be the ones driving this and ensuring we take our rightful place.

    “That’s what the CMSA does – protecting the rights of solicitors and facilitating engagements with the SEC,” he said.

    On emerging areas in the capital market, the chairman said: “We’re looking at improved green bonds and more transactions within that space. We’re also looking at impact financing.”

    He said one of the purposes of the conference was to examine innovative ways to bring development to the country.

    “We want to ensure that the economic downturns become upturns and that there is enough inflow from innovative tools for the good of the common man,” Iweze said.

    Ekpo stressed that the capital market thrives on contracts, noting that lawyers play a significant role in drafting them.

    She said: “If a contract goes wrong due to inclusion or non-inclusion of some clauses, then it creates a problem for the transaction and that can erode confidence in the capital market.

    “So, the role of lawyers is very central in capital market transactions.

    “I think lawyers need to be given more prominence beyond being behind the scenes drafting these agreements, to ensure all parties are protected.

    “They need to take the front row rather than allowing advisers to run these transactions.

    “It’s all about contracts and enforcing them, because if there is a deficiency, then our market will have a problem.”

    During the panel sessions, the need for more socially beneficial investments, as well as impact bonds, women bonds and green sukuk were highlighted.