Business News
COVID-19: Capital Market Recapitalisation Not Desirable Now – Operators
Capital Market Operators (CMOs) yesterday called on regulators to suspend any fresh plan for recapitalisation of the stockbroking community for now, due to economic realities occasioned by COVID-19 pandemic.
Mr Tunde Amolegbe, President, Chartered Institute of Stockbrokers (CIS), gave the advice at a webinar organised by the Capital Market Academics of Nigeria.
Recall that the Securities and Exchange Commission(SEC) in February hinted of plans for recapitalisation of stockbroking firms ahead of the change of ownership of the Nigerian Stock Exchange.
Ms Mary Uduk, then SEC acting Director-General, said with only 10 per cent of the 255 stockbroking firms controlling 80 per cent of the market activities, there was a need for recapitalisation.
Speaking at the webinar, Amolegbe said regulators should suspend any such move for now due to the coronavirus pandemic.
He said COVID-19 had slowed down NSE demutualisation programme, noting that funding challenge of the CIS would be more aggravated.
The CIS president said that given its importance, the Federal Government should treat the capital market as a priority sector with regard to COVID-19 alleviation strategies.
“In view of the existing major constraints with regard to trading liquidity, the Central Bank of Nigeria should formulate policies that will drive more liquidity into the hands of CMOs, especially equity traders,” he said.
Amolegbe said that stability and growth of the equity market would catalyse overall market rebound and economic growth.
“We can start with banks giving significant concessions to CMOs through margin facilities and other lines of credit for trading,” he said.
According to him, banking stocks should be restored to marginable stocks list with strengthened guidelines.
Amolegbe also called for industry-wide effort on reducing unclaimed dividend phenomenon, using innovations brought about due to COVID situation.
He said the time-to-market for new debt and equity issues should be reduced in order to get funding to critical sectors of the economy.
The CIS chief also stressed the need for the launch of a derivatives market because it was needed to hedge investments at a time of elevated risks such as this.
He observed that the Nigerian capital market was substantially challenged even before the coming of the coronavirus.
“The equity market, which drives performance of the other market segments had been characterised by low investor patronage and low liquidity ever since the global financial crisis which hit Nigeria in 2008,” he said.
On recommendations for CMOs, he urged them to embrace and elevate use of technology in their operations, especially remote business devices.
He explained that COVID-19 had shown that it was possible to run 100 per cent e-brokerage without the need for a physical location.
Also speaking, Dr Suleyman Ndanusa, former SEC DG, said regulatory environment must be innovative and as well embrace business continuity plan.
On the role of regulators in mitigating the impact of COVID-19, Ndanusa said modern economy was dependent on sound capital market.
He said that market regulators must ensure ease of doing business to attract more foreign portfolio and direct investment into the country.
Ndanusa said regulators must stay nimble and create regulatory environment for innovation and expect regulatory changes that come with added costs.
He noted that regulatory budgets must be architected for efficiency, savings and value for money.
Ndanusa called for automation of regulatory reporting obligations, Internet of things (IOT) devices and data to automatically prescribe trade malfeasance and remediation.
“The COVID-19 induced crisis is a call to deepen reforms in the Capital Market Regulatory landscape. The future is now, so lets take it,” he said.
Ndanusa tasked regulators on investor protection and transparency to boost confidence in the Nigerian capital market.
Prof. Wilson Herbert, of the Federal University Otuoke, called for introduction of new products that would centre on challenges posed by COVID -19.
Business News
NAICOM, RMAFC Collaborate on Economic Diversification
By Tony Obiechina, Abuja
The Commissioner for Insurance and CEO, Mr. Olusegun Ayo Omosehin, and his management team have met with the members of the Constitutional Committee on “Mobilisation and Diversification” of the Revenue Mobilisation Allocation and Fiscal Commission ( RMAFC) led by Engr.
Sani Mohammed Baba, to explore ways of diversifying the Nigerian economy.During their working visit to NAICOM Headquarters, Mr.
Olusegun Ayo Omosehin, in his opening remarks, reaffirmed the critical role of the insurance sector regulator in supervising, regulating, and safeguarding the interests of insurance policyholders.He highlighted insurance’s pivotal role in mobilising savings for long-term developmental projects and enabling businesses to thrive while managing risks effectively.
He also stressed the Commission’s commitment to ensuring insurance companies meet their obligations, thus contributing to the sustainability of the economy.
Speaking, Mohammed Baba emphasised the importance of revenue generation, institutional expansion, and employment creation for Nigerians through collaborative efforts.
The Commissioner for Insurance also acknowledged President Bola Ahmed Tinubu’s ambitious goal of growing the Nigerian economy to One Trillion United States Dollars ($1 trillion) by 2026.
He expressed the insurance sector’s intent to significantly contribute to this objective. Additionally, he mentioned ongoing efforts to embed insurance within the National Credit Scheme to ensure its sustainability.
Omosehin stressed the need for continuous advocacy and sensitization of government institutions about the vital role of insurance in national economic development.
Business News
CBN Unveils Strategy to Boost Remittances, Grants AIP To 14 New IMTOs
By Tony Obiechina, Abuja
The Central Bank of Nigeria (CBN) has activated plans to double foreign-currency remittance flows through formal channels by granting 14 new International Money Transfer Operators (IMTOs) Approval-in-Principle (AIP).
This was disclosed in Abuja on Wednesday, by the Bank’s Acting Director of Corporate Communications, Mrs.
Hakama Sidi Ali, who stated that the initiative will help increase the sustained supply of foreign exchange in the official market by promoting greater competition and innovation amongst IMTOs to lower the cost of remittance transactions and boost financial inclusion.She said, “This will spur liquidity in Nigeria’s Autonomous Foreign Exchange Market (NAFEX), augmenting price discovery to enable a market-driven fair value for the naira.
“It will be recalled that the CBN Governor, Mr. Olayemi Cardoso, had recently declared: “We’ve set ourselves a target to double remittance flows into Nigeria within a year, a goal I firmly believe is within reach.
“We are wasting no time driving progress to remove any bottlenecks hindering flows through formal channels permanently. We have a determined pathway and a sequenced approach to tackling all challenges ahead, working hand in hand with key stakeholders in the remittance industry,” she stated.
Continuing, Sidi Ali, said that the CBN viewed increasing formal remittance flows—one of the major sources of foreign exchange, accounting for over 6% of GDP—as a means of reducing the historical volatility in Nigeria’s exchange rate caused by external factors, such as fluctuations in foreign investment and oil export proceeds.
The increase in the number of IMTOs is one of the primary actions initiated by the CBN’s remittance task force, overseen by Governor Cardoso as a collaborative unit pulling together specialists to work closely with the private sector and market operators to facilitate the ease of doing business in the remittance ecosystem in Nigeria.
The task force was established as a direct result of an executive learning session with IMTOs during the World Bank/IMF Spring Meetings held in Washington DC, United States of America, in April 2024. The task force will meet regularly to implement strategy and monitor the impact of its measures on remittance inflows.
Business News
Tinubu Inaugurates Critical Gas Projects, Reassures Energy Sector Investors
By Matthew Dadiya, Abuja
President Bola Tinubu has reassured investors in the energy sector of his administration’s resolve to further enhance the business environment and ensure investment convenience.
The President spoke Wednesday at the inauguration of three milestone projects, including the expanded AHL Gas Processing Plant; the ANOH Gas Processing Plant, and the 23.
3km ANOH – Obiafu-Obrikom-Oben (OB3) Custody Transfer Metering Station Gas Pipeline.In a speech during the virtual inauguration of the projects at the State House, Tinubu also assured citizens that his administration is stepping up its coordination of other landmark projects and initiatives that will ensure the earliest realization of gas-fueled prosperity in the country.
The President, according to a statement by Special Adviser on Media and Publicity, Ajuri Ngelale, noted that the projects were fully in line with the Decade of Gas Initiative and his administration’s vision to grow value from the nation’s abundant gas assets, while concurrently eliminating gas flaring and accelerating industrialization.
“This event is highly significant to our country as it demonstrates the administration’s concerted efforts to accelerate the development of critical gas infrastructure geared at significantly enhancing the supply of energy to boost industrial growth and create employment opportunities.
“It is pleasing that when these projects become fully operational, approximately 500MMscf of gas in aggregate will be supplied to the domestic market from these two gas processing plants, which represents over 25% incremental growth in gas supply.
“In practical terms, this is more gas to the power sector, gas-based industries, and other critical segments of the economy. I, therefore, commend the strategic vision of the NNPC Limited and its partners, Sterling Oil Exploration & Energy Production Company Limited (SEEPCO) and Seplat Energy Plc, for this laudable and value-adding projects,” President Tinubu said.
The President said his government remains determined in its bid to leverage the nation’s vast gas capacity to drive economic growth.
“Aside from the presidential CNG initiative which is aimed at moving the good people of Nigeria away from petrol and diesel as vehicular combustion fuel, significant progress has also been recorded in incentivizing gas development through Presidential Directives.
“The theme of this inauguration – ‘From Gas to Prosperity; Renewed Hope’, must be adopted by all gas-sector participants and would-be investors as a clarion call to ramp up efforts to accelerate investment and developments of projects in the gas sector on a win-win basis.
“I would once again commend the efforts of NNPC Ltd, alongside SEEPCO and Seplat Energy, on this business partnership initiative, and congratulate you all on the successful implementation of the three projects,” the President said.
President Tinubu also reiterated his government’s resolve to continue to provide support in deepening domestic gas utilization, increase national power generation capacity, revitalize industries, and create multiple job opportunities for economic growth.
“Today, I have the singular honour to inaugurate the expansion of the AHL Gas Processing Plant, the ANOH Gas Processing Plant, and the 23.3Km ANOH to Obiafu-Obrikom-Oben (OB3) Custody Transfer Metering Station Gas Pipeline Projects in line with my administration’s resolve to provide energy for Nigerians, and to use our vast natural gas resources to transform Nigeria,” the President stated.
May 15, 2024