By PETER EGWUATU
THE Securities and Exchange Commission (SEC) has announced plans to establish a National Investors Protection Fund (NIPF) that would provide succour to investors who may be genuinely defrauded in the Nigerian capital market.
Director General of the Commission, Ms. Arunma Oteh, who revealed this on Tuesday, said as part of its responsibility, the Investment and Securities Act (ISA) empowers the Commission to create NIPF, which will help to protect investors that have genuine case to make against capital market operator who may have defrauded them.
Oteh, who reasoned that many investors had suffered losses in the hands of fraudulent operators without any compensation, noted that going by the renewed efforts of SEC to protect investors, such experiences would be a thing of the past.
According to her, “The Commission will set up an investor protection fund, which will compensate investors who suffer losses as a result of fraudulent practices of market operators. Though, investors are responsible for the investment decisions they make, so they should ensure they engage registered financial advisers in all their deals. “
Meanwhile, it should be noted that there was an existing Investor Protection Fund by the Nigerian Stock Exchange (NSE). But that fund has not been active.
Only recently, the NSE reconstituted a new board for the Investors Protection Fund (IPF) headed by Gamaliel Onosode. Other members of the nine-man board include: Oscar Onyema, Misan Kofi-Senaya, Kyari Bukar, Chief Sola Abodurin, Fubara Anga, Edosa Kennedy Aigbekaen, Sam Onukwe and Umaru Modibo.
The Investors Protection Fund is a scheme funded by the World Bank to ensure confidence in the stock market and it is made to give succour to investors who in one way or the other had been genuinely duped or lost his/her investment in the market.
Shareholders had in the past complained of not benefiting from the Fund and had asked the federal government to investigate how the Fund is being managed.
The shareholders said since the commencement of the scheme aided by the World Bank in the market, shareholders had not benefited from the fund even as they were yet to also benefit from the enlightenment educational fund in the market.
Processes are underway to ensure that companies indicating interest in the country’s power sector reform list on the Nigerian Stock Exchange.
Speaking on the state of the capital market, Oteh pointed out that the issue of multinational companies listing on the NSE has been raised at the National Economic Management Team meeting and that President Goodluck Jonathan was interested in the matter.
Foreign investors driving trading volume
According to her, it makes sense for companies operating in the country to list to ensure proper corporate governance and “we believe they will be valued accordingly.”
Oteh, who disclosed that new companies will come to the Nigerian Stock Exchange for primary issue in the first quarter of 2013, urged investors to meet their stock brokers to be properly educated before taking position on investing in any company.
She noted that Nigerian capital market is fast growing, as it currently contrubtes 20 per cent to Gross Domestic Product from 16 per cent some months ago.
The SEC boss, however, said that despite the recovery in the market, daily trading volume is driven by foreign investors who contribute about 70 per cent. “If the international investors are seeing the opportunities in the capital market, why not the local investors? It is better to buy cheap and sell high,” she said.
Oteh attributed the poor performance of the oil and gas sector in the market to the ongoing reform, noting that the recovery in the market has been driven so far by banking stocks.