AfDB, SEC sign $460,000 grant to deploy surveillance system in Nigeria’s capital market

The Securities and Exchange Commission (SEC) says it has signed an agreement with African Development Bank (AfDB) Group for a grant on a market surveillance system project.

In a statement on Monday, SEC said the grant valued at $460,000 is to finance technical assistance and capacity building for capital markets development under the “Nigeria Securities Market Surveillance System Project”.

The statement added that the grant is part of efforts to modernise Nigeria’s capital markets and ensure that it is well positioned to support economic transformation driven by private sector investment.

Speaking at the ceremony, Lamin Barrow, director-general, AfDB, said the grant from the capital markets development trust fund (CMDTF) — a multi-donor trust fund administered by the African Development Bank-and supported by the Ministry of Finance of Luxembourg and the Ministry of Foreign Trade and Cooperation of the Netherlands — will support the acquisition, installation and deployment of a real-time automated securities market surveillance system for the Nigeria’s capital market.

“Today’s ceremony marks yet another important milestone in our partnership and efforts to modernise Nigeria’s capital markets and ensure that it is well positioned to support economic transformation driven by private sector investment,” Barrow said.

“The introduction of a surveillance system will enhance oversight over securities trading across all existing and future trading platforms and all tradable securities and products by the SEC. It will therefore preserve securities market integrity, boost investor confidence and enhance financial inclusion, among other expected outcomes.

The AfDB DG said the design of the technical assistance project embeds training activities to strengthen the capacity of users of the securities market surveillance system and the preparation of relevant operational manuals and workflow processing and document management for the surveillance solution.

“The technical assistance support builds on the SEC’s initiatives to strengthen the supervisory and regulatory framework as well as enhance market integrity and transparency under the Nigeria Capital Markets Development Master Plan 2015-2025, with a view to positioning Nigeria as an attractive destination for portfolio investments,” he added.

“It also aligns well with the Bank’s Country Strategy Paper for Nigeria 2020-2024, which recognises the importance of a sound, well-regulated, resilient, effectively functioning and globally competitive financial markets in Nigeria for sustainable growth and development.”

Barrow said at a time when economies are buffeted by global shocks, improving the attractiveness of capital markets to domestic and portfolio international investors is imperative for greater resource mobilisation and building resilience to sustain Africa’s economic recovery.

He said the pandemic had reinforced global risk aversion, prompting international investors to move their portfolios into safer assets and havens, expressing the desire to see the growth of the equity market well beyond the current N28.16 trillion.

In his remarks, Lamido Yuguda, SEC’s director-general, said the commission is very pleased and thankful to AfDB for providing the grant support to execute these important projects, particularly the project to acquire a surveillance solution.

Yuguda said a market surveillance system is required to aid the regulator in detecting and addressing market abuse as quickly and efficiently as possible and to proactively prevent major infractions.

He said the automated market surveillance tool would enhance the commission’s role in investors’ protection, as well as ensure a transparent, fair and orderly market and reduce systemic risk.

According to Yuguda, with the successful acquisition of a surveillance solution for the commission, the SEC expects the following outcomes: the curtailment of market infractions; a modernised and technology-driven regulatory approach which enhances the protection of investors; enhanced investor confidence leading to the increased participation of domestic investors (both institutional and retail) in the capital market.

He said the surveillance solution would also aid an increased impact on GDP through the capital market’s role in the efficient intermediation and allocation of capital to the real economy to create jobs, encourage savings and facilitate wealth creation. 

He also disclosed that the SEC is implementing a comprehensive market and institutional reform programme to reposition the Nigerian capital market to be globally competitive and an attractive destination for investment activities in Africa. The ten-year Capital Market Master Plan (2015-2025) sets the vision, objectives and initiatives required to achieve this goal.