Yemisi Izuora
Transactions executed by domestic investors in Nigeria’s Capital Market in January 2020, has shown considerable level of confidence by local investors in the market.
The transactions which stood at N165.14 billion was measured to have outperformed the total value of transactions executed by foreign investors by approximately 40 per cent.
According to Mary Uduk, Ag Director General, DG, of the Securities and Exchange Commission, SEC, foreign investors made
transactions valued at N70.32 billion within the period.
Uduk, who was the Guest Speaker at the a Forum organized by the Capital Market Correspondents Association of Nigerian (CAMCAN), in Lagos today, Friday, said however, the domestic institutional transactions within the period stood at N83.47 billion while domestic retail transactions was N81.67 billion.
This trend she said re-emphasizes the need for increase retail investors’ participation in the market.
The DG explained that she gave the figure to underscore the importance of not allowing uncertainties dampen stakeholders resolve to attain the ‘ideal market’, the capital market of our dream.
Speaking further she said, “In spite of these trends, clearly, the fundamentals of our markets and economies remain solid and promising as astute investors know.
“I therefore, urge retail investors to leverage on this and invest in the capital market, which is one of the avenues to build sustainable and long-term wealth.”
Over the years, she remarked as the market recovered, the Securities and Exchange Commission, in conjunction with other self-regulatory organizations (SROs), has continued to enhance the regulatory framework through various policy reforms and initiatives to boost investors’ confidence, sustain market recovery and put the market back on the path of growth and development.
Uduk expressed the need for increased participation of local (retail and institutional) investors in the market and for foreign investors to have higher confidence concerning the safety of their investments.
Furthermore, she stated that the 10-year Capital Market Master Plan (CMMP) was developed in 2015 to map out strategies for improvement of the Nigerian Capital market in areas such as investor protection and education, professionalism, product innovation etc, and for the expansion of the capital market’s role in the Nigerian economy.
The CMMP Identified 101 Initiatives and at the forefront of these initiatives is the e-dividend initiative, dematerialization of share certificates, development of non-interest products, responsive rulemaking, transaction cost reduction, financial literacy, and financial inclusion.
Others include: the establishment of the National Investors Protection Fund, the Complaints Management Framework, recapitalization by Capital Market Operators, Direct Cash Settlement, among others.
The Commission has since begun implementation of Risk-Based Supervision -a dynamic forward-looking supervisory process that is focused on the continuous identification, assessment, and control of risks that are inherent in the activities of a regulated entity.
This she said is all in a bid to restore confidence and increase participation in the market.
In terms of rule-making, the Commission the DG stressed will continue to develop robust rules in line with global best practices that would foster investor confidence, build an enabling regulatory environment and increase participation.
In the asset management space, in order to safeguard the assets of investors; the Commission has introduced rules that require all Fund Managers to have custodians hold all funds and securities of clients.
Continuing she added that, “Regulatory returns are being filed on timely basis with the Commission, with a view to determining the financial health of market operators and to ensure that they are fit and proper to remain in the market.
Recently, the Federal Government signed the Finance Bill into Law which took effect from February 01, 2020, Uduk said adding that the Act has some positive amendments for the capital market.
The new Finance Act has the following among others, as its objectives: promoting fiscal equity, reforming domestic tax laws to align with global best practices, introducing tax incentives for investments in infrastructure and capital markets, supporting micro, small and medium size businesses, and raising revenues for government.
This is one of the measures to increase participation in the capital market, increase sustainable wealth and grow the Nigerian economy.
The Commission, she disclosed is planning to
deploy Real Time Automated Market Surveillance System; drive the growth of Collective Investment Schemes (CIS); improve capital market literacy and complete the infusion of capital market into schools’ curricula.
Other measures to be taken this year include
robust engagement with sister agencies like CBN, PENCOM, NAICOM, etc, to ensure consideration of the capital market in policy making; leveraging the success of the e-Dividend initiative to drive Direct Cash Settlement and solve the multiple subscription problem; implement minimum operating standards for operators; further drive down time-to-market for issues, mainstream the CMMP into national economic policies; adopt and develop Financial Technology (FinTech) and innovation in our market; and develop the commodities and derivatives space, among others.
Notwithstanding the numerous initiatives and strategies being implemented, the Commission realizes that more still needs to be done as the market’s performance is reasonably influenced by activities of foreign investors such that their instantaneous exit poses a challenge.
This she observed is a problem faced by many other countries but assured that efforts are continually being made by the Commission to increase retail investors’ participation in the Nigerian capital market.
The Commission according to her believes that there is a nexus between increased market participation and market efficiency.
“We are prepared to provide the necessary support to CAMCAN in the area of capital market awareness campaigns.
This is with a view to making you properly positioned to deliver on your mandate as the fourth estate of the realm.”, she said.
The DG noted that today the world, is facing common challenge, which is the challenge posed by globalization and the need to work out a framework to gain and prosper from it.
She said the current COVID-19 pandemic with its dire consequences has prompted the cutting of the 2020 budget by N1.5 trillion, reduction in capital expenditure, likely increase in unemployment, decrease in government revenue, underperformance by sub-national government, etc. on our economy and is a wakeup call for the country to truly and quickly diversify the economy.
This she said can only happen if individuals, institutions, operators and the media work together in the true belief that mutual help is the best form of self-help.