Ms Mary Uduk is the Acting Managing Director of the Securities and Exchange Commission, SEC. In this interview, she highlighted some of the decisions taken at the last Capital Market Committee, CMC, and the initiatives the Commission, in collaboration with the CMC, is putting in place to move the market forward. Excerpts:
COULD you let us know what the quantum of unclaimed dividends in the market is as at today
Unclaimed dividend in the market is being tackled in minimum of two solid approaches. One of them is e-dividend. For every account that is mandated, all accrued dividends is automatically paid. Then there is the use of regularization of multiple accounts. We discovered that while dividend is growing so is unclaimed dividends. Those people that have multiple accounts can only lay claim to dividends in one account, all the others will keep warehousing dividends as long as they are not regularized.
We want to see how far the registrars can go in regularizing the multiple accounts so that we can have a specific figure for the unclaimed dividends. We have a provision in CAMA that if unclaimed dividends stay for a specified time, those dividends should be returned to the paying company and that is what the Commission is doing.
Now any unclaimed dividends which is 15 months and above is returned to the paying company. That way, the shareholders also benefit as those money could be invested by the company and result is more interest for the shareholders.
Considering the rate at which the gambling industry is gaining ground in Nigeria, is the SEC looking at introducing a product that will allow youths interested in gambling to invest in the capital market as is done in some advanced countries?
We presently do not have any laws on gambling, but we have mutual funds and it covers every asset in the capital market whether it is money market, insurance, capital market, real estate and infrastructure among others. The youths can invest in these. Rather than leave your money in savings account, you can invest in mutual funds. It runs like savings account and after three months, you can withdraw your money same way you do with the banks. We don’t have to gamble. You need to let them know that there are so many products in the capital market that they can invest in rather than gambling and losing their money.
We have various products that are very attractive where they can invest their money. We have commenced investor education and enlightenment for Nigerians to understand the benefit of these Funds which gives more interest than leave your money in bank account.
What is the update on MTN’s listing? Is the company still coming to the market this year?
We all know that a company cannot list its shares in the market unless it is a public company and as we speak, MTN has not yet completed the process. There is a process of coming to the market. First, you have to be a public company, and you need to have your shares registered with the Commission.
However, I do know that MTN had issues with the Nigerian government and they have been trying to sort it out. I think they have sorted out one aspect of that. I don’t think the other part has been sorted out and because they have committed to coming to the market, they have decided to come through Listing by Introduction.
I know that the company is working hard towards that; they have visited the Commission to explain that. They have also assured us that after the Listing by Introduction, once they are able to sort out the other issues with the government, the can now come fully to the market.
Right now, there is no formal application from them, but people need to understand that there are many processes for coming to the market. It can be either through Listing by Introduction or Initial Public Offering. When they file their application, we will be able to give you the right information.
Has there been training for those that will drive the process and trading in Derivatives?
Derivatives is a very good product to be in the market. As we speak, the rule on Derivatives will be ready soon and we have been building capacity in-house in partnership with South Korea. We have a knowledge sharing programme with them, they have been to the country twice now and our staff are scheduled to travel to their country for more training. Even their Ambassador has been to the Commission and all of that is part of building capacity and training the staff.
Even in the market, the Nigerian Stock Exchange (NSE) is doing a lot in the area as well as the FMDQ OTC Securities Exchange. FMDQ has taken some people to India for capacity building. All stakeholders including, the Central Bank of Nigeria (CBN) have been joining hands together to ensure that we get it right.
What is the position of SEC in regulating crypto-currency?
In the last CMC, we talked about it and inaugurated a committee in respect of FinTech. The committee was charged with coming up with a FinTech Road Map on the capital market community and we also have a dedicated division in the Commission on that.
The Committee is working assiduously to decide what regulations we can make in this area. The commission has the mandate to protect investors. We know that crypto assets are volatile unlike ordinary assets.
Since January 2017, we have been asking investors to be vigilant when it comes to investing in crypto-currency. We don’t want to get in the way of innovation. Regulators across the globe are paying attention to what is happening in this sphere. On the one hand, they want to protect investors and on the other hand, they want to support innovation. On all fronts, the SEC is looking at development in the FinTech space.
There is also on-going collaboration led by the CBN. There is an inter-agency committee on virtual currencies which the SEC is working on with other market operators. In no distant time, the SEC will come up with regulations on crypto currencies. We are embarking on investor education so that investors understand what it’s all about.
The market has been down for quite some time. Does it mean investors do not have confidence in the market?
Market depends on several factors, some are global and others are domestic. Some are industrial, while others are also in terms of the company’s performance. You can see sectors that are doing better, you can also see specific sectors that are not doing well. Around election, it is possible for people to have different expectations.
Some want to keep their money, some sell their shares to vie for political office, but as elections are over, we expect that some of those people that withdrew prior to elections will come back to the market. Around elections in the history of Nigeria, we see that there is usually a lull in the market.
In 2017, the market rose by 42 percent, but in 2018, it fell by 17 percent. There would always be varying sentiments. What is very important about the market is that in the long run, even though you have fluctuations, the market eventually goes up. The stock exchange index started in 1984 with 100 points, today we are at over 30,000 points. There will definitely be ups and downs, but the market goes up at the long run.
How strong has the market been and what has been the contribution of the market to the economy?
We can look at the contribution of the market to the economy in terms of capitalisation ratio as well as how many new issuances were made in the market. Last year, we were able to make more corporate bond issuance than the previous year. In 2017, we did about N23 billion and in 2018, we did about N32.3 billion. Going forward, we are hoping to do better.
Given the fact that we are working to reduce transaction cost as well as time-to-market, we also advice sub-nationals to come to the market so that we can have new issuances in the market. We have seen quite a number of activities in the bond segment recently and we are hoping that we will see more in the equities segment too not just private placement and Rights Issue, we also hope to see more of Initial Public Offerings.