The Securities and Exchange Commission (SEC) has said that the Commission aims to attract more retail investors into the Nigerian capital market in its determination to deepen and develop the market.
Director General of the SEC, Mounir Gwarzo stated this when the Commission received members of the House of Representatives Committee on Capital Markets and other Institutions in Abuja, Tuesday.
Gwarzo said that this is one of the reasons why the Commission has embarked on various initiatives line e-Dividend, Direct Cash Settlement, National Investors Protection Fund (NIPF) among others to attract retail investors to the Market.
He said “We have pursued a lot of initiatives in the last year and we are pursuing more this year. We are taking it from a perspective that this market has never witnessed and the perspective is to address some of the lingering complaints of the investor. We believe that the retail investors are the owners of this market so our strategy should focus on them.
“As a country we have only less than 2% participation of retail investors in our market. Malaysia has 9%, South Africa 19%, USA 43%, and UK 13%. So our market is highly less being participated by the retail investors. Due to the dominance of the foreign investors, anytime they move out of the market the market goes down. Our effort is to see that in the next 5-10 years we raise the level of involvement of the retail investor to at least 5%”.
Gwarzo said the Commission has identified some of the challenges hindering the retail investor from accessing the market and believes tackling these challenges through the recent initiatives by the Commission would be more productive.
“We identified some challenges that they have had for the last 30-40 years in this market like not receiving their dividends. That is why we came up with e-dividend. This is the first time we are addressing that issue and it is very successful. We have had Road shows and Town Hall meetings in Abuja and Lagos, next week we are going to be in Kano, in three weeks time we will be in Port Harcourt.
The DG disclosed that the SEC is also addressing the issue of dematerialization, where share certificates have not been fully dematerialized in the market.
“Since the introduction of Central Securities Clearing System (CSCS) exactly 21 years ago, we have not been able to dematerialize certificates fully. As at August last year, only 40% of certificates had been dematerialized, but as today, we have 97.5% of shares that have been dematerialized. Which means that when we fully dematerialize, the issues of a client wanting to sell his shares and has to go through the rigorous process of verification which takes 6 months to one year will be a thing of the past.
“We also inaugurated our National Investors Protection Fund and so far we have paid over 300 investors that lost their money in this market. The maximum amount is N200, 000 and the rules are already on our website for people to see. We think that by getting that NIPF it will further provide comfort to the investors” he added.
Gwarzo said the SEC is also strongly encouraging the listing of more companies in the market, as it believes that the market needs to be deep for it to be sustainable.
In his remarks, Chairman of the Committee, Dr. Tajudeen Yusuf said the Committee Members were in the Commission to see what has been done in 2015 as that will give them a good platform to look at 2016.
He said “We are all aware that the market is not doing well presently and SEC generates to own revenue from the market. So whatever that happens in the market has a direct correlation with the revenue of SEC. so, we have seen that there is need to dig deeper, cost and look for ways to ensure that as a regulator SEC is up and kicking to be able to perform their responsibilities.
“The Capital Market is an area that should bring the required resources and has been neglected for too long and we are genuinely interested in helping SEC fulfill its mandate.
“We will assist to ensure that companies that ought to be listed are listed; we need to explore avenues to getting them into the capital market. Companies that are listed pay more tax than those not listed. Maybe we should make those that are not listed to pay more tax while those listed should be given some concessions.
Yusuf expressed the need to explore areas where the National Assembly can give teeth to the regulations of the SEC as any market that has loose regulation, is dead on arrival and the National Assembly does not in any way take the SEC lightly.
He commended the Commission on its efforts at sensitizing investors so far, adding that more sensitization needs to be done especially to those at the grassroots.