The Director General, Securities and Exchange Commission, Mr. Mounir Gwarzo frowns at erring banks, quoted companies and registrars that contribute to the rising value of unclaimed dividends in the Nigerian capital market. In this interview with NGOZI AMUCHE, the SEC boss discloses that the Commission is set to punish any market operator or stakeholder that engages in any form of infraction. Excerpt:
The current value of unclaimed dividend in Nigeria is about N90 billion and is still increasing. Findings show that some banks and registrars are responsible for the increasing figure. Are you optimistic that they will comply with the new e- Dividend deadline?
The banks and registrars have no reason not to cooperate. We made it clear that it is not going to be business as usual. We are operating on zero tolerance and we have mandated investors to report any bank or registrar that frustrate their efforts in the EDividend registration process. When you get to a bank and you do not see a signal that E-Dividend mandate can be done there, please report to SEC and the Central Bank of Nigeria.
Apart from that, any bank that charges N100 registration fees should also be reported because we have not given them the mandate to charge anyone. The CBN had also emphasised on zero tolerance for infraction. It is annoying that only 6,000 Nigerians nationwide have registered for the exercise.
There is an allegation that the 10-year Capital Market Master Plan that was launched last year has been abandoned due to economic recession. What is the update on the initiative?
It can never be abandoned. When SEC makes law, it will be implemented. The Commission is working closely with the executive arm of government to ensure a successful implementation of the master plan. The Capital Market Master Plan Implementation Committee met President Muhammadu Buhari, the CBN governor, Mr. Godwin Emefiele, the Attorney General of the Federation, Mr Abubakar Malami and the Speaker of the House of Representatives, Yakubu Dogara, on the issue. This is to ensure that we have their buy-in because for you to be able to implement the Master Plan successfully, you need the buy-in of the executive, legislature and the judiciary.
Retail investors seem to have abandoned the market as the major market indicators slide consistently. What are you doing to restore their confidence?
The only way to attract retail investors back to the market is to ensure that concrete steps are taken to adequately address their concerns, especially the issue of unclaimed dividend. Before 2014, hardly could you find a retail investor investing in fixed income. But if we are to provide some data now, you will see some retail investors investing in fixed income. In the past, retail investors were familiar with investing in equity market. Now, Nigerians have seen a platform where they can invest and trade the same way they trade in equity, which means you can also trade in fixed income. And from what they are doing, we believe that in the next couple of years, the fixed income market will improve greatly.
The capital market lost a good number of foreign investors in the past. What do you think was responsible for that?
The challenge for some of these foreign portfolio investors is the Foreign Exchange crisis. We engaged the CBN, and we said it is very important for the banks to come up with a formula or criteria for allocating Forex to the investors. So, if am a portfolio investor, I should be able to know the criteria that I am going to bid for in the Forex and the apex bank agreed that it was going to discuss with various banks and come up with a formula. There were speculations that it was because the foreign investors could not repatriate their dividends to their countries; that is not true. Once you have brought in money legally, there won’t be any problem. Equally, they don’t have problem in repatriating their dividends too. So, for the foreign portfolio investors, they don’t have such problems doing business here.
In January, SEC and the Debt Management Office formed a committee to set up modalities for the first sovereign Sukuk bond. What is the update?
The sovereign Sukuk bond initially scheduled for the third quarter of 2016 would now be issued in the first quarter of 2017. The sovereign Sukuk bond is being packaged by SEC and the DMO. The bond issuance will not be visible due to unforeseen circumstances.
From our discussion with them, it is very unlikely that a sovereign Sukuk will be issued this year. They are working towards it, but if they are not able to issue it this year, they are certainly looking at the first quarter of 2017. The Federal Inland Revenue Services had agreed to grant necessary tax concession to corporate bond on the proposed Sukuk bond.
The Federal government seems to have lost focus in terms of infrastructure financing. As a capital market expert, what will be your advice to them?
The slide in crude oil price and drop in revenue generation made it imperative for government to look for alternative source of capital to finance infrastructure development. The need for alternative sources of capital to finance infrastructure becomes increasingly more compelling with fragility of growth from major emerging markets.
The country would attract significant amount of affordable capital from the Gulf countries and other established world issuing a sovereign Sukuk bond.
SEC and DMO will collaborate on ways to address the country’s investment needs. The bond, when issued, will send the much needed positive message to the market amid the negative investor sentiment that persists currently.
In line with the important role of SMEs as engines of growth in the country, what is SEC doing to ensure that they have access to the market?
We think there is need to encourage small and medium enterprises to access the market. And we need to harmonise the listing requirements both from the Nigerian Stock Exchange and other platforms in the market. The capital market presents an opportunity of financing the MSME sector.
Capital markets have always played a role in bringing together those with savings to invest and those who need capital, thereby supporting economic growth. The International Organisation of Securities Commissions has emphasised the need for capital markets to support SMEs in addressing this financing challenge by providing alternative funding sources. And that is exactly what we are doing.
The capital market is very technical. Financial literacy will go a long way in educating investors. Do you have any such plans for the investing public?
Yes, financial literacy is one issue that we discussed at the capital market committee meeting. We need to do a lot about educating people at the primary level on what the capital market is all about. And we are working towards having a week of financial literacy, not only for capital market but for the entire industry. We are collaborating with the CBN and the Pension Commission so that we can get a dedicated week to do a lot of enlightenment on why people should be more literate on financial issues.
