From Uche Usim, Abuja
In an effort to modernise Nigeria’s capital markets and support its economic transformation driven by private sector investment, the African Development Bank (AfDB) Group has signed a grant valued at $460,000 to SEC as a finance technical assistance and capacity building for capital markets development under the “Nigeria Securities Market Surveillance System Project”.
Speaking at the ceremony, Director General, African Development Bank Group, Mr Lamin Barrow, said the grant from the Capital Markets Development Trust Fund (CMDTF) – a multi-donor trust fund administered by the African Development Bank-and supported by the Ministry of Finance of Luxembourg and the Ministry of Foreign Trade and Cooperation of the Netherlands, will support the acquisition, installation and deployment of a real-time automated securities market surveillance system of the Nigeria capital markets.
According to Barrow, “Today’s ceremony marks yet another important milestone in our partnership and efforts to modernize Nigeria’s capital markets and ensure that it is well positioned to support economic transformation driven by private sector investment.
“The introduction of a surveillance system will enhance oversight over securities trading across all existing and future trading platforms and all tradable securities and products by the SEC. It will therefore preserve securities market integrity, boost investor confidence and enhance financial inclusion, among other expected outcomes.
The AfDB DG said to ensure sound implementation and sustainability, the design of the technical assistance project embeds training activities to strengthen the capacity of users of the securities market surveillance system, and the preparation of relevant operational manuals and workflow processing and document management for the surveillance solution.
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“It also aligns well with the Bank’s Country Strategy Paper for Nigeria 2020-2024 which recognizes the importance of a sound, well-regulated, resilient, effectively functioning and globally competitive financial markets in Nigeria for sustainable growth and development”.
Barrow said at a time when economies are buffeted by global shocks, improving the attractiveness of capital markets to domestic and portfolio international investors is imperative for greater resource mobilization and building resilience to sustain Africa’s economic recovery.
He said the pandemic has reinforced global risk aversion, prompting international investors to move their portfolios into safer assets and havens, expressing the desire to see the growth of the equity market well beyond the current NGN 28.16 trillion underpinned by the continued growth of the corporate bond market in Nigeria.
In his remarks, the Director General of the Securities and Exchange Commission, Mr Lamido Yuguda, said that the SEC is very pleased and thankful to AfDB for providing the grant support to execute these very important projects, particularly the project to acquire a surveillance solution.
Yuguda said a market surveillance system is required to aid the regulator in detecting and addressing market abuse as quickly and efficiently as possible and to proactively prevent major infractions. An automated market surveillance tool will enhance the Commission’s role in investor protection, as well as ensure a transparent, fair and orderly market and reduce systemic risk.
According to the SEC boss, “With the successful acquisition of a surveillance solution for the Commission, the SEC expects the following outcomes: The curtailment of market infractions; A modernized and technology-driven regulatory approach which enhances the protection of investors; Enhanced investor confidence leading to the increased participation of domestic investors (both institutional and retail) in the capital market.”