Nigeria’s SEC wants more retail investors in capital market

The Securities and Exchange Commission, SEC, on Thursday noted the low participation of retail investors in the country’s capital market, saying its vision was to attract more players to help deepen and develop the market.

The Director General of the commission, Mounir Gwarzo told the House of Representatives Committee on Capital Markets and other Institutions in Abuja, that less than two per cent participation of retail investors exists in the country’s capital market.

Mr. Gwarzo, who said Malaysia has 9 per cent; United Kingdom 13 per cent; South Africa 19 per cent, and USA 43 per cent, said Nigeria’s retail investors’ participation level was poor.

He said due to the dominance of the foreign investors, the market goes down anytime the they exit the market.

The SEC effort, he said, was to see that in the next five to ten years the level of involvement of the retail investors would be raised to at least five per cent.

Mr. Gwarzo said one of the reasons the Commission embarked on various initiatives, namely e-Dividend, Direct Cash Settlement, National Investors Protection Fund (NIPF), among others, was to attract retail investors to the market.

“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,” he said.

The SEC boss said the Commission had identified some of the challenges hindering retail investors from accessing the market, saying removing them through the recent initiatives would enhance productivity.

Some of these challenges, which have been there in the last 30-40 years in market, included investors not receiving their dividends, which necessitated the introduction of the e-dividend system to address the problem.

The DG disclosed that the SEC was also addressing the issue of dematerialization, where share certificates have not been fully dematerialized in the market.

He said since the introduction of Central Securities Clearing System (CSCS) about 21 years ago, the Commission has not yet been able to dematerialize certificates fully.

As at August last year, only 40 per cent of certificates had been dematerialized, pointing out that as at today, about 97.5 per cent of shares have been dematerialized to remove the rigorous process of verification, which takes six months to one year.

With the inauguration of the National Investors Protection Fund, Mr. Gwarzo said so far over 300 investors that lost their money in the market have been paid.

He said the SEC was also encouraging the listing of more companies in the market, as it believed that the market needed to be deep to be sustainable.

The Chairman of the House Committee, 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.

Lamenting that the market was not doing well at the moment, with SEC generating its revenue from the market, he said whatever happens in the market has a direct correlation with the revenue of SEC.