This week the second Lagos and London Capital Markets in Partnership Conference took place, under the “Leveraging Cross-Border Capital Markets for Sustainable Growth”. CNBC Africa spoke to Mounir Gwarzo, Director General of the Securities and Exchange Commission who elaborated on what this collaboration means in light of the capital market master plan.
In his opening address, Oscar Onyema, Chief Executive Officer of the The Nigerian Stock Exchange, spoke on how critical capital markets are to the sustainability of growth and development in an economy.
“It is my strong belief that one of the things that Nigeria (and Africa) needs to sustain its growth is a solid and vibrant capital market ecosystem that will attract investment and unlock the potential that exists in the economy. Capital markets increase the proportion of long-term savings that is channelled to long-term investments.”
Mounir Gwarzo, Director General of the Securities and Exchange Commission (SEC) told CNBC Africa that the collaboration is “excellent” because of the surplus, where a company was both listed on the Nigerian Stock Exchange (NSE) and also the London Stock Exchange (LSE), and that the partnership would minimise error by having the LSE see issues the NSE might not looking at and vice versa, as well as addressing issues around capacity building would also come in.
Gwarzo adds: "Our market in the next 5-10 years will be more robust, will be more competitive and will also be deeper and this collaboration the NSE is having with the LSE is also in the spirit of the capital market plan because one of the initiatives of the master plan is for key stakeholders in the market to have collaborations with other stakeholders.”
Implementation of the master plan for 2016
At the start of 2015 Gwarzo says the SEC came up with about 10 initiatives within the master plan, the issues that saw as “low hanging fruit” and it implemented all 10 successfully.
“This year we are focusing on more of the bigger issues - the bigger issues include listing of companies to encourage more companies to be listed on the exchange, to also cultivate the saving culture in the country, particularly within the area of the retail investors to bring them into the market because they have had a bitter experience in the market,” said Gwarzo.
“We are also looking at infrastructure funds, how we can be able to attract infrastructure funds in the market - those are the areas we are looking at in 2016.”
He adds that SEC needs to also look at its listing requirements, encouraging a listing that will target particular sectors.
Gwarzo says those will be the agricultural sector and the solid minerals because they are sectors which are very unique, so the listings criteria from the NSE should take that into consideration and something it will be initiating this year.
"We are looking at reducing the transaction cost, because some of the complaints companies make is that transaction costs in the market is quite on the high side - we have set off an industry-wide committee to look at holistically all the transaction costs in the market with a view of bringing it down,” said Gwarzo.
Including aspects such as the efficiency, disclosure and corporate governance process of the transaction.
What the SEC has been doing is continuously engage with the public, informing people why they should come to the market.
“But more importantly, addressing the lingering issue of unclaimed dividend, so we are introducing the electronic dividend so that when a company declares dividend - investors are able to collect their dividend”
He adds: “These are some of the initiatives we are doing but like I say, our focus is on the retail investor because they are the ones that, come rain, come shine - we stay in the market.”