The Securities and Exchange Commission (SEC) Nigeria at the weekend said that from the perspective of capital market development, the development of a liquid government bonds market would impact positively on Nigeria’s economy based on its investment attraction potential.
The Director-General of the commission, Mr. Lamido Yuguda, made this remark during the Annual Conference of the Capital Market Correspondents Association of Nigeria (CAMCAN) with the theme ‘Nigeria’s Public Debt and the Capital Market’ held in Lagos.
Yuguda based his argument on the fact that a liquid government bond markets implied that there is sufficient offering of government bonds across a range of maturities, which is crucial to the construction of the benchmark yield curve with the attendant implications for the establishment of the market-based risk-free interest rate used in equity pricing.
Represented at the event by the commission’s Executive Commissioner Operations of the SEC, Mr. Dayo Obisan, the Director-General maintained that this synergistic relationship between the government bond and equity markets had catalyzed private investment and equity market capitalization in many East Asian economies following the establishment of a liquid debt securities market.
He said: “At the same time, an increase in government expenditure funded by debt crowds out private investment, which in turn adversely affects aggregate expenditure and, consequently, economic growth with implications for the capital market.
“In addition, an underdeveloped capital market will affect institutional investors negatively, restraining the amount and maturity of funding available to the government locally”, Yuguda added.
Yuguda further stressed that as the apex regulator of the capital market, the SEC was committed to creating an enabling and facilitative oversight and regulatory framework supportive of the deepening and development of the nation’s capital market.
The Director-General explained that the recently launched revised Nigerian Capital Market Master Plan 2021-2025 underscored the Commission’s commitment to deepening and re-positioning the financial market as a key anchor of our economy.
He said: “The Master Plan, which represents collective aspirations of the capital market community, is focused on driving initiatives geared towards growing and deepening the Market with the ultimate goal of accelerating the emergence of our Country into the top 20 global economies by the year 2025”, Danbatta added.
Yuguda maintained that the capital market was more resilient and is on a steady growth trajectory, adding that capital market correspondents have contributed to the development of the market and expressed delight at their partnership with the Commission in this noble task of developing and deepening the capital market.
The Director-General said capital market journalists had taken on an increasingly important role of communicating to the public some of the Commission’s initiatives aimed at developing the market.
He assured that the SEC was committed to supporting efforts aimed at addressing financial literacy and empowerment gaps within our society. This commitment is expressed in the various financial inclusion and literacy initiatives being undertaken by the Commission solely or in collaboration with other stakeholders. This workshop we are witnessing today being one of such.
Yuguda expatiated: “There is no doubt in my mind that, the capital market presents a good platform for addressing many of Nigeria’s economic challenges. On our part as regulators, we shall continue to introduce new ideas and policies towards developing and regulating a capital market that is dynamic, fair, transparent and efficient, to contribute to the nation’s economic development.
“We will also continue to fulfil its mandate of protecting investors and creating an enabling environment for market operators. Policymakers and practitioners alike are keen to understand the complex nexus between the public debt market and the Nigerian capital market” he added.
In her remarks, Chairperson of CAMCAN, Mrs. Chinyere Joel- Nwokeoma, said that the annual workshop was part of the association’s contributions to the development and growth of the nation’s economy by bringing regulators, operators and company executives to discuss economic issues that affect the market in particular and the economy in general.
According to her, the theme was informed by concerns in different quarters concerning the nation’s rising total debt stock which stood at N42.80 trillion as of June 2022.
