Recent controversies trailing the Nigerian capital market have forced many to query the safety of investments in the sector. They have also called to question the role of some regulators in ensuring investor confidence in the market.
According to market stakeholders, these issues should be tackled thoroughly to restore confidence and ensure transparency in the market.
The concern is coming after the Nigerian Stock Exchange (NSE) on April 11, 2018, lifted the technical suspension placed on Oando shares only for the Securities and Exchange Commission (SEC), to order a reversal three hours later.
NSE in a letter entitled: “Notification of Lifting of Technical Suspension on the Shares of Oando,’’ said SEC on April 9, directed it to lift the suspension.
The letter said, “We refer to our bulletins of 18, 20 and 23 October, 2017 regarding the directive of the SEC to the Nigerian Stock Exchange to place the shares of Oando Plc on Technical Suspension. Please be informed that on April 9, 2018, the commission directed the Exchange to lift the technical suspension placed on the shares of Oando.
On receipt of the Commission’s directive, the NSE in a statement from its Executive Director, Regulations, Tinuade Awe, ordered the lift up of the technical suspension, including testing on its trading system.
“Further to the Commission’s directive of April 9, please be advised that effective today, April 11, 2018, the Exchange lifted the technical suspension placed on the shares of Oando. Consequently, there is no longer any impediment to price movement in Oando shares.”
As directed, trading in the company’s shares began to the excitement of the market with its share price even rising to a ₦6.30, a 5.8 per cent increase in less than three hours of trading. But to the chagrin of the general public, SEC later ordered the reversal of the lifting of the technical suspension for no reason.
The NSE in a swift statement regretted the stalemate and assured stakeholders that “in the overall interest of investors in Nigeria’s capital markets, and following consultation with the Commission, at the start of trading on April 12, 2018, trading in Oando’s shares will resume without any impediment in price movement consistent with NSE’s market structure.”
The drama then continued few days later as the Minister of Finance, Kemi Adeosun removed the Acting Director General of SEC, Dr. Abdul Zubair, and replaced him with Mary Uduk. The minister also appointed three acting commissioners for the commission.
Zubair’s ouster followed the suspension five months ago of the substantive head of SEC, Mounir Gwarzo, whose fate continues to hang in the balance despite the recommendation for his outright dismissal by an investigative panel set up by the minister to probe him. Gwarzo is still being investigated for allegedly awarding contracts linked to him and his wife and for paying himself a severance package of ₦104 million.
Reacting to these developments, market analysts, brokers and shareholders have called on the government to reach a conclusion and unearth a substantive SEC DG, adding that it was time the regulatory bodies learn from its mistakes and move forward for the sake of the nation’s capital market. Addressing Journalists during the 2018 Post Capital Market Committee (CMC), new Acting Director General, SEC, Mary Uduk said the commission will continue with Master Plan and implement initiatives that will promote investors’ confidence such as E-Dividend registration, Direct Cash Settlement, Dematerialisation, Complaint Management Framework, Financial Literacy and Investors’ Protection Fund, among others.
Speaking to Daily Sun, Chief Executive Officer (CEO), Johnson Chukwu, urged the government to address the suspension of Gwarzo. He said, “SEC does not have a substantive DG now. The DG is on suspension and the matter around it has not been conclusive yet so what we should be pushing for is that the tenure of the suspension of Gwarzo should be addressed. If the government reaches a conclusion, they should resolve and get a substantive DG. Yes there were turns and twists on the Oando issue, but that is now behind us, I don’t think we should dwell on that. If there were mistakes, then it is time we learn from it.”
On his part, CEO, Front Vine Capital and Securities Limited, Eugene Ezenwa, said that regulatory bodies all over the world are 100 per cent government responsibility and its ultimate purpose in intervening is to protect the investor and safeguard the integrity of the market.
He however advised the government and SEC to work with the NSE on how to bring in more innovations to ensure the market develops so as to attract more investors and not lose the ones it has.
According to Ezenwa “If there is a negative interference from the Ministry of Finance then it should be curtailed but however negative interference won’t affect the market directly”
Chairman, Progressive Association of Nigeria (PSAN), Boniface Okezie, said although the interference from the government is based on the fact that SEC is yet to have a board for three years, this could send the wrong signal to not only the local investors but the foreign investors as well.
“The issue of appointing and re-appointing whenever there is a problem on ground is not entirely the best thing for the market that is emerging right now because Zubair has succeeded in driving that confidence when Gwarzo was suspended. What the Minister has done now is to create a bad blood among the work force in SEC as an organization resulting to crisis. If you want to bastardise the capital market by frequent appointment, re-appointment, removal and all that, it becomes a problem and the world won’t take us serious”, he explained.
Okezie added, “The Minister’s frequent interference and overbearing has to be curtailed because SEC should be independent from the Finance Minister, once she understands her duty, the capital market will move forward, so all hands must be on deck to move the capital market forward and the government has to reconstitute the SEC board without further delay.”