The Securities and Exchange Commission, SEC, has said that enhanced information with regards to operations of the Lagos Free Zone is needed to properly guide investors as the management of the Zone prepares to access the market.
The Director General, DG, of the Commission, Mr. Lamido Yuguda therefore challenged Management of the Lagos Free Zone to step up their investor enlightenment campaign as the company prepares to access the capital market.
Yuguda who stated this during a meeting between the SEC, the Nigeria Export Processing Zones Authority and the Lagos Free Zone in Abuja Wednesday, said this will further enlighten potential investors on the operations of the Zone.
The SEC Boss stated that there is a lot of ignorance among investors in this regard, stating that when companies are planning to access the market there is need for aggressive investor education to enable them make informed decisions.
According to him, “when you come to the market to list, you need to massively educate people. The reason why companies list is to be able to have access to a wide range of investors, from small to big. The key thing between companies is cash flow and if you have a positive cash flow over a long period of time it makes your company attractive to investors. If you add this to the fact that you are operating in NEPZA regulated Free Zone, that adds another layer.
“Investors would need to have as much information as possible about the operations of your company, especially since it operates within a Free Zone. They want to know how the NEPZA Act affects your cash flows, and what is available to investors. These are important so investors can see the value the companies in the Free Zone have over the ones that are not operating there. They also want to know what the goal of listing is as you need to erase those doubts and scepticism before listing”.
Yuguda stated that given the quantum of development and investment domiciled within the Free Zone, it holds the key to Nigeria’s future and commended the Management for already contributing immensely to the economy by attracting international brands like Kellogg’s, Dano, BASF and Colgate to the Zone.
“Lagos Free Zone is enough to give domestic and international business communities the hope and courage to make valuable investments in Nigeria. You can imagine how much we spend travelling to buy goods abroad. With LFZ, I am convinced that we can transfer some of our demand to local production. I believe this is a bold step to bring back Nigeria’s industrial prowess”.
He then pledged the SEC’s backing to ensure that the Free Zone remains attractive to investors and all other stakeholders by providing prompt regulatory backing where necessary.
In his remarks, Chief Executive Officer Lagos Free Zone Mr. Dinesh Rathi said his organisation has assisted in creating employment for more than 7,000 people and investment has also gone up by considerably since they commenced operations.
Rathi expressed appreciation to the SEC Management for the support and progress on the draft regulation to enable the Zone access the capital market.
He said, “We hope the entire regulatory framework on Free Zone listing is completed by April. We solicit your support as this will pave the way for other operators who are having their own free zones to follow suit.
“Listing is not only a financial step, but will also help deepen the market and attracts more investors. Listing creates a lot of positivity. Once the Free Zone is listed, part of the port gets listed too. In future, there is a possibility of the port also coming to the market. It is very crucial in a lot of ways and the faster it is done the better for all. We want to get past the finishing line quickly”.
In his comments, Managing Director of the Nigeria Export Processing Zones Authority, Prof. Adesoji Adesugba stated that the aim of the Free Zone scheme was to bring companies that are faraway to operate within Nigeria where they can build their factories here, employ Nigerians and also export the products using the relevant laws beneficial to them.
“To make it efficient, they are like a country within a country not subject to normal Nigerian laws. Since the SEC is efficient, we can allow you in to regulate these companies. People need to understand that investment into this enclave before now was an FDI, no tax and the investors can take away 100% of their profit.
“They will be able to make reports to shareholders, the governance structure that is being utilized is as stipulated by the SEC. SEC stipulates the rules before listing is done”.
Adesugba said that as a Nigerian, he prefers that Nigerians also benefit from the profits of these companies operating within the country hence his support on the listing desire of the Lagos Free Zone.
“I would not want people to come here, develop a port and take away profit 100% without Nigerians benefiting from it. We need to design the regulations in such a way that the funds that are coming from the capital market suits our purposes. It is like a foreign country, but it is still in Nigeria and Nigerians should be able to invest and het paid the dividends of their investments. The Free Zone is more efficient and does not allow those things that affect commerce ordinarily affect it” he said.
He therefore commended the SEC Management on their efforts in ensuring the listing process is expedited. We need to finalise this work together and ensure that we meet the timelines.