CAPITAL MARKET: WE WILL ADDRESS PROBLEM OF NEW ISSUANCE IN 2012 - OTEH

By Peter Egwuatu
The Director-General of the Securities and Exchange Commission (SEC), Ms Arunma Oteh in an interview with capital market correspondents discusses the challenges facing the Nigerian capital market, steps being taken to revive the market and the expectation for 2012. Excerpts:

What is the Commission doing in terms of attracting new issues?

One of the things we must address is new issuance, whether it is fixed income or equities. This is because we have had a decline in new issuance. In fact, this year we have had no new issuance except for rights issues by a number of companies.

So we have agreed with operators that there has to be concerted effort to bring new issuance to the market. One piece of it is that we must make sure that the market is attractive enough for them to come to list. But the other aspect is that we must make sure that the Exchange is a reflection of the economy.

And also we followed the discussion around the importance of having telecoms companies, upstream oil and gas, agro businesses to list on the Exchange and ensure that the privatisation agenda of the government, particularly with reference to the power sector, allows us to have the privatised companies listed on the Exchange. It is something that we agreed to work on as early as possible in 2012 so that we can develop a road map for us to have new listings.

How would your commission and operators assess the capital market in 2011?

We feel that 2011 was a year that was challenging primarily because of what was happening globally and because of the keen interest our market has continued to enjoy from foreign investors. And therefore for the first time in a very long period, America had a downgrade because of their debt ceiling issues with the sovereign debt crisis in Europe and the issues with the banking sector in Europe, all impacting on our market.

So, some of the things we have to do is how to ensure that both local investor base and retail investor base are as active as they can be in our market. What we will do early next year is to map out more clearly plans to ensure that local investor base is able to take up the opportunity that the decline in the market has provided because we don't want a situation where it is the international investors who are picking up the equities at reasonable prices and both our local institutional and local retail investors are not able to. So, we have mapped out some very specific plans which we will further develop.

DG SEC, Arunma Oteh
How is SEC partnering Akwa Ibom State in investor education?

One of the things that we agreed with Akwa Ibom State Governor, Godswill Akpabio is that the e-library that they are going to establish by the end of January, we will have an investment learning centre.

This is something that the SEC, Nigerian Stock Exchange (NSE) and Chartered Institute of Stockbrokers (CIS) have committed to working with the government of Akwa Ibom to have that centre set up immediately because we recognise that the electronic platform is such an important platform given our youthful population and what is happening in the world

. So, we are very pleased that the Governor responded immediately to this request that we have an investment learning centre that is basically on an e-platform which will be incorporated in this e-library which they said is the biggest library in Africa.

What is the commission doing in terms of improving market infrastructure?

In fact, to us infrastructure is very important, in the sense that we want to make it more efficient for foreign investors to invest in our market. So, we are committed to addressing all of those things that will ensure efficiency. One of those things is to ensure that our dematerialisation plan is really firmed up. Dematerialisation started a few years ago.

In fact, the CMC put together a committee led by Mr. Emeka Madubuike, the Chairman of ASHON, and they have presented every report to SEC on how we can make sure we firm up the issues of dematerialisation. We believe that that is important to making this market more efficient. We believe there are other issues that support that; that we need to make sure that we leverage technology better, that we at SEC need to accelerate our effort in technology.

The NSE is doing the same; they are working on a bigger robust platform for trading. The CSCS needs to do the same; and that we need to move to leveraging technology better at our market. And market operators need to do the same. And this is why there is a sub-committee on market infrastructure and technology.

In terms of capacity-building, what is your commission doing?

Another important issue to us is capacity-building. We have continued to highlight the issue of capacity in the market. We feel that the capital market is one that is evolving all the time. That the issue of capacity is so critical and therefore for the regulator, we need to keep making the effort to enhance capacity for the capital market operators and for the investors.

In terms of the maiden Capital Market Committee (CMC) retreat held recently in Uyo, what was the objective of the Commission?

In terms of the objective of our maiden retreat, the objective was to give us an opportunity as a community to assess what the issues that we had to deal with in 2011 were. What are the successes, what are the challenges we faced? And then map out the way forward to ensure we benefit from the experiences of 2011 for 2012. In my estimation, and I know I speak for all my colleagues; here we exceeded our expectations in terms of what we wanted to achieve for the capital market retreat.

We had each of the sub-committees of the capital market. We are revamping the CMC to reflect a modern capital market committee. So, we have seven sub-committees including Investor Confidence Restoration Committee, Rules and Compliance Committee, Fixed Income Committee, Investment Management Committee, Market Infrastructure, Product Development and Business Development, Commodities Exchanges Committee.

What we decided as Capital Market Community during our third quarter meeting was that we needed to review and revamp the CMC. And one of the things we did during this retreat was to try to agree on what the terms of reference should be for each of these subcommittees so that they reflect the issues that our capital market is facing today.

We also discussed what should be the plan of action for each of these committees for 2012, what are their deliverables? What we came up with exceeded our expectations in terms of the things that we wanted to achieve. It shows that the capital market community is just a group of fine professionals who at any point you called them are ready to put in their best.

What we agreed on is that every issue that was raised was very important. And what we then need to have is what I consider the CMC roadmap for how we can make sure that the successes we have recorded is sustained and then the challenges we had, we try to see how to address them.