‘SEC is committed to inclusive participation’
Mounir Gwarzo is the Director-General of the Securities and Exchange Commission (SEC). He is passionate about turning things around, especially, improving investors’ participation. In this interview with HELEN OJI, he explains various steps the commission has taken so far to restore confidence and competitiveness. Excerpts
What was the focus of the last Capital Market Committee (CMC) meeting?
The essence of the meeting is to make all stakeholders in the capital market come together to review the performance of the market, first review the performance of the economy, then to review the performance of the capital market. SEC normally gives an overview of the Nigerian capital market and we also receive an update from the various stakeholders – the Nigerian Stock Exchange, the FMDQ, the NASD, the Trade and Securities Tribunal, all stakeholders in the capital market.
Secondly, we do also set up committees to drive a particular initiative in the market and those committees will also have the opportunity to come and brief the house on what they have done and the capital market members will now ask questions for clarifications. So that was what happened at the last meeting and it was a very fruitful meeting. It is probably the longest capital market meeting we ever had.
How far have you gone with the Capital Market Master Plan?
Yes, we usually give an update on the implementation of capital market Master Plan and always at the CMC meeting and this time around it was very rich because within the master plan, the Capital Market Implementation Council (CAMMIC), prior to this meeting, did a lot of work few months ago in Lagos. The CAMMIC is an advocacy group, meant to kick start the buying in of all the key stakeholders in the market, particularly at the executive, legislative and judicial level to mainstream the capital market plan, so that government will now appreciate the whole essence of the capital market.
When government appreciates the whole essence of capital market, it would put capital market into considerations when it is making policies. So, few weeks ago, the CAMMIC members were in Abuja and they made courtesy calls to the Minister of Finance and Minister of Budget and National Planning and the central bank governor, but more importantly, the Vice President of Nigeria. Again, it was just to inform him about the essence of the Master Plan and solicit his support for the Master Plan. So, they had that advocacy group and just last week, we had an interface with both the Debt Management Office and its leadership, at the director level and the Federal Inland Revenue level. These visits became important because the CAMMIC members were able to come up with certain issues that we want DMO to look into and certain concessions they think the Federal Inland Revenue Service need to provide. The meetings were very fruitful, educating and far-reaching. Timelines was reiterated, deliverables were created and timelines were given for those deliverables to be concluded.
Can we have an update on the dematerialisation exercise?
We have done quite well based on the report from the Central Securities Clearing System, almost 98.4 per cent of the dematerialisation has been concluded and we agreed that we will give the registrars that are delaying the conclusion of the process so that we can achieve 100 per cent compliance to the directive, a timeline within which they should conclude the process. So, the dematerialisation has been doing quite well and I want to say in the next one or two months, there will be 100 per cent compliance.
When is the Nigerian Stock Exchange likely to complete the demutualisation process?
It is difficult for me to say when it will come, but what we have done in SEC is to create the enabling environment; creating rules. About a month or two ago, all the consultants paid an update visit to the leadership of NSE, and introduced the parties that had been engaged and the parties were able to brief us on some of the things on ground. It is still work in progress; it is not an easy thing, but professionals have been appointed to look at the various aspects of demutualisation and that is where we are today.
Looking at the capital market, tell us the major obstacles/impetus to the growth of the market and what SEC is doing in this regard?
First and foremost, all over the world the capital market has gone down, and in Nigeria; the capital market is a reflection of the Nigerian economy. The Nigerian economy is going through difficult times basically because of two factors – the oil price and commodity price, and that is why the fall in the capital market is not only limited to Nigeria. It is a global phenomenon, because the fall in oil price affected almost every country and the fall in commodities prices affected almost all countries. So, it is these factors that led to the current situation we are now.
As at today, the economy has gone into a recession because our GDP growth rate has gone to negative for both the first and second quarters. Economically speaking, any country that experiences two-quarters of negative GDP means that country is in recession. But, we believe with the current policies and commitment of the government and drives they are pushing for some of these initiatives things will be better. So, the capital market is a reflection of the economy that is why it has not risen to where people expected it to be. Also, people should realise that it is a market that can go up or down. It is not a market that you expect should be up at all times, just like in any economy sometimes there are good days and bad days as well.
What are the initiatives you have put in place so far to restore confidence in the market?
Yes, we are developing a lot of initiatives with respect to the e-dividend, even though it is going through some trivia issues. We held a meeting with the Central Bank of Nigeria, leadership of the Nigerian interbank settlement, committee of bankers, and all the registers in attendance, and I am happy to report that we were able to arrive at far-reaching decisions, and some of the trivia issues that we thought were major issues affecting the smooth rolling of the e-dividend have been sorted out.
The other thing we have been doing for the retail investor is our introduction of the direct cash settlement, which allows an investor whenever he gives a mandate to the broker for his shares to be sold, when they are sold, he gets paid directly into the clients account rather than into the broker’s account. The dematerialisation is also an incentive for the retail investor, because instead of the retail investor spending six months or one year before his certificates are verified, in this case, it is going to be a matter of two to three days. Once the investor wants to sell the shares he will be able to do that. These are some of the initiatives we are doing. We also launched the National Investors’ Protection Fund, to temporarily alleviate some of the problems an investor may encounter through the loss of his investment, but it must be through a registered stock broking firm. So the NIPF is launched and we have so far paid almost 500 of them. So these and many others are the initiatives that we think should give investors some comfort to come back to the market.
You know, most of the initiatives we have been longing for in this market for quite a while, it takes time to take off. The pace is very slow, but as at today’s meeting, we agreed that the technical team working with the e-dividend should include direct settlement, because they are one and the same.
It is all about data, and the database, which they have agreed to do. So, I believe with some of the milestones we are achieving, like the milestone of the unclaimed dividend and when that platform is also extended to the direct cash settlement, we will be able to see more progress.
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