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Published On: Sun, Jan 25th, 2015

How new SEC D-G can overcome the challenges ahead?

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Acting Director-General of the Securities and Exchange Commission (SEC Nigeria), Mounir H.Gwarzo

Acting Director-General of the Securities and Exchange Commission (SEC Nigeria), Mounir H.Gwarzo

A lot is expected from the new Acting Director-General of the Securities and Exchange Commission (SEC Nigeria), Mounir H.Gwarzo, writes our Business Editor, Aminu Imam, who has been following developments in the nation’s regulatory body of the Nigerian capital market.

A fortnight ago, erstwhile Executive Commissioner, Operations in SEC Nigeria, Mr. Mounir H. Gwarzo took over from the now outgone Director-General (D-G) of the Commission, Ms. Arunma Oteh, as the Acting D-G.

Prior to his appointment, the jostling, calculations and permutations on who was going to take over were fierce.

To say the least, the jostling for the top-most post was a big battle. In fact, industry observers said it was a supremacy contest among those who wanted their candidate as the next helmsman of the regulatory body.

This is not unconnected with the fact that SEC Nigeria is unique in many respects; the role that SEC Nigeria plays in the nation’s economy is very critical and such changes should be expected from time to time to strengthen capacity and further improve the ability of the apex regulator to carry out its functions effectively.

The D-G has work to do and he clearly prefers to work away far from the limelight. As the market regulator, he knows the impact his words can have and weighed each one carefully. Populist utterances are not his thing.

However, the question is: will Ms. Gwarzo deliver the goods? At the end of the day, that is what it will come down to.He, more than anyone else, should know that the task before him is as much technical as it is political. The barons will not just stand back and watch him hack away at the status quo. They will cajole, threaten, resist and fight back.

As he settles down to steer the affairs of SEC, market operators have continued to advise him on what to do in order to take the Commission and market to the next level as the Nigerian capital market is yet again facing serious challenges.

In early December last year, the stock market dipped to levels not seen in almost two years. Amid concerns over falling commodity prices and on-going security issues, the index dropped below 34,000 points.

Investors are also eyeing next year’s general and presidential elections, awaiting clarity on the future political climate. While the conclusion of the election cycle by the end of February should provide some insight, the market will still face uncertainty over the economy’s prospects deep into 2015, including lingering concerns over violence from Boko Haram in the northeastof the country.

However, the new SEC boss has assured Nigerians that the Commission will continue to ensure that the market remains vibrant, in order to attract investors both locally and internationally.

Gwarzo gave the assurance when he received members of the Chartered Institute of Stockbrokers (CIS) visited him in the Commission’s headquarters in Abuja.

He said the current management would strive to develop domestic investment from retail and institutional investors. “We will step-up to reach out to the market and improve investment. On the international side, what is most important is the enabling environment. Right now, the rules are very friendly and that is why we keep changing them from time to time to suit best practices and attract investors”, he emphasised.

At last, here is someone who knows what the matter is and appreciates what needs to be done. No doubt, he has his work cut out for him. When things are broken, it does not require blinding insight to tell what needs fixing.

Besides, the acting Director-General has also assured the staff in his meeting with them earlier, in the week he assumed duty, that there is nothing to fight about. He reassured staff members that the present management is committed to returning the organization to its traditional core values experienced a decade ago and would undergo corporate rebranding to alter battered image suffered in the past.

Gwarzo also mentioned that the present management is aware about the rights of staff that had been violated in the past few years resulting in an in-house strife, but reassured that the issue of human rights would be paramount under the new regime.

In addition, he said the era of fighting has passed; because there will be nothing to fight for. “The issues on ground have been amicably resolved, so there would be no need to fight again”, he stated.

That the staff re-deployment came out within 48 hours of assumption of duty of the Ag. D-G shows the timeliness of the redeployment and the way the Ag. D-G has a clear and deep understanding of the workings of the SEC due to the fact that he previously worked in the Commission.

Some industry watchers have advised the D-G to also keep in focusthe comments by the President and Chairman of the Governing Council of the Institute, Mr. Albert Okumagba, during their recent meeting with him, that the over 60 percent control of the Nigerian stock market is by foreign investors.

Okumagba has said, the current situation where over 60 percent of the market is control by foreign investors give serious cause for concern, saying: “The level of participation of our locals is effectively less than 3 million when ideally, over 80 million of our people should be in the market.

According to Mr. Okumagba, “We have opportunities for our own domestic investors;

we believe that some of the factors that are holding the market down today will soon ease-off, like issues of security, election and crude oil prices; once the elections are done with, the market will begin to stabilize’ he added.

However, the good news is that Mr. Mounir also harped on investors education, both for retail and institutional, to improve the level of investment from the domestic side.

Some industry watchers have advised the D-G to use his position to strengthen the Nigeria Commodity Exchange (NCX), formerly known as the Abuja Commodities and Securities Exchange, which launched a pilot electronic warehouse receipt system (e-WRS) in Lagos.

The new platform is expected to enable farmers place their commodities at NCX-accredited warehouse in different parts of the country, where they would be issued electronic receipts, stating details such as commodity type, quality and quantity, owner and other relevant information.

This creates a centralized marketplace where commodity producers can sell their products to those who wish to use them for manufacturing, export or consumption. Commodities traded have been identified to include maize, sorghum cocoa, sesame seeds and cashew.

The receipts issued for the deposits of commodities essentially become fungible financial instruments, which can be used amongst other things as collaterals for obtaining bank loans; securities, tradable on the floor of The Exchange and as token for storage of products in the warehouses until prices appreciate.

According to a Chartered Accountant and Senior management consultant, Mr. Leke Fakayode, who spoke to Peoples Daily, “This initiative is laudable and has several benefits, which include providing liquidity through the creation of commodity markets’ related financial instruments, and also acting like derivatives to deepen the sophistication of the financial system in Nigeria.

“Beyond the benefits of sophistication, there are other direct benefits such as the provision of standard storage facilities for operators in the agricultural value chain and strengthening small scale farmers and agro-allied businesses, whilst creating jobs.

“To enhance the long term integrity of this – new NCX – initiative, relevant authorities may need to engage the private sector further to promote the provision of solutions and services to bridge the identified gaps in supporting infrastructure.

“From the provision of private warehouses to privately owned transportation hubs, there are opportunities to drive logistical efficiency that will make the exchange effectively functional. A Business Model that takes into consideration these challenges and offers practical solutions to them will guarantee the effectiveness of an enviable commodities market in Nigeria”, he advised.

Most commentators have expressed the faith that with Gwarzo’s well-endorsed capacity and his proven managerial skills, he should be able to work a miracle at SEC Nigeria as he continuespushing the envelope.

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