Economy
SEC Targets Trillions of Naira from Non-Interest Capital Market
By Aduragbemi Omiyale
The Securities and Exchange Commission (SEC) has said it plans to enhance the non-interest capital market because of its capability to boost liquidity in the financial markets by trillions of Naira.
The Director-General of SEC, Mr Lamido Yuguda, while speaking with the executives of the Non-Interest Financial Institutions Association of Nigeria (NIFIAN) in Abuja over the weekend, said the market segment was given attention in the 10-year Capital Market Master Plan.
According to him, in the next three years, the plan is to ensure that 25 per cent of the total value of the Nigerian capital market is from the non-interest sector.
“We are talking of trillions, which means that we are not scratching the surface right now. Both the market and the commission need to do more. We are working on ensuring that we have a framework that looks at issues relating to the non-interest capital market and ensures we tackle them.
“There are many opportunities in the market right now for non-interest products. The biggest players right now are the pension fund. PenCom is interested that whatever product is there have some basic risk management features in them, but I think there is a lot that we can do.
“You talk about the Sukuk market and the move towards complexities, I would say that even the simple Sukuk, we have not had enough of it.
“When we came in 2020, it was only the sovereign Sukuk and the subnational Sukuk from Osun State. We have tried to attract interest to the product by doing many seminars and rejoining IFSB fully. We also tried to encourage private issuers and show the potential of the Sukuk to other players in the market. This is a simple product but a very powerful one,” he said.
Mr Yuguda stated that Nigeria needs to adopt the normal Sukuk forms where money is raised via Sukuk, assets are built and then cash flows are generated from the assets which then flow back to the Sukuk holders.
“That’s the traditional way, which happened in countries like Malaysia. Malaysia has a lot of hotels and resorts, and the key financing tool they have used is the Sukuk. They understand the power of this Sukuk instrument. It’s a collateralised form of lending; the asset is built and belongs to the people who have contributed money.
“You can see the cash flows coming back. These hotels are increasing in output in the economy in which it is located. People are working, earning more income. The investors are happy because they are receiving the cash flows, and the country is getting more prosperous as people from other parts of the world go there to have a good life,” the SEC chief stated.
The DG emphasised the need for all stakeholders to create more awareness, as there is a lot of ignorance and misconceptions among others about Sukuk, and they all need to be addressed.
“A lot of countries have made tremendous progress which I think we can learn from. Once people see it and it works, we will get many interested in the sector.
“The commission is ready to commit human and material resources to ensure that the market grows to the level we want. We are interested in the market’s growth as that will positively affect the country’s economy,” Mr Yuguda stated.
He disclosed that the agency has just exposed the rules for Shariah advisors in its drive to grow this market segment, noting that Shariah governance is crucial, considering that compliance with Shariah rules and principles is important in non-interest capital market operations/transactions.
“The market is developing fast, and there is a need for the proper regulation of those that will drive the process. The provision of the rules is in line with local and international best practices. The regulatory organization in the Nigerian Financial System, such as CBN and NAICOM, had issued such guidelines to provide clear and good Shariah governance in their respective sectors.
“Making the Shariah Advisory service a registrable function in the market will assist in effective implementation of the proposed consolidation of the Shariah governance rules and will also be an additional source of revenue to the Commission,” the commission stated.
Speaking earlier, The President of NIFIAN, Mr Hassan Usman, urged SEC to provide a framework for non-interest finance to avoid operators’ misuse of the platform.
Mr Usman stated that Nigerians need more awareness of the non-interest capital market. He stated that the association is interested in programmes that will increase the enlightenment of the product and boost its contributions to market capitalisation.
By Dipo Olowookere
A 0.31 per cent gain was recorded by the Nigerian Exchange (NGX) Limited on Tuesday, helped by renewed bargain-hunting by investors, with the year-to-date return extending to 6.61 per cent.
It was observed that the growth achieved by Customs Street yesterday was supported by the banking and the industrial goods indices, which went up by 1.32 per cent and 0.69 per cent apiece.
They offset the losses recorded by the three other sectors, with the insurance counter down by 1.32 per cent, the consumer goods segment down by 0.23 per cent, and the energy space down by 0.17 per cent.
At the close of business, the All-Share Index (ASI) increased by 516.94 points to 165,901.57 points from 165,384.63 points and the market capitalization appreciated by N333 billion to N106.495 trillion from N106.162 trillion.
The market breadth index was positive yesterday after the bourse ended with 35 price gainers and 34 price losers, representing bullish investor sentiment.
The quartet of Industrial and Medical Gases (IMG), Union Dicon, Zichis, and Austin Laz chalked up 10.00 per cent each to sell for N34.65, N9.90, N5.06, and N4.07, respectively, while RT Briscoe appreciated by 9.95 per cent to N9.50.
On the flip side, Omatek lost 10.00 per cent to trade at N2.43, Cutix also fell by 10.00 per cent to N3.15, Union Homes shrank by 9.95 per cent to N76.90, Sunu Assurances declined by 9.94 per cent to N4.62, and Deap Capital crashed by 9.93 per cent to N7.62.
During the trading day, 736.4 million stocks worth N24.7 billion exchanged hands in 46,026 deals compared with the 762.8 million stocks valued at N18.4 billion traded in 55,374 deals a day earlier, indicating a rise in the trading value by 34.24 per cent, and a slip in the trading volume and number of deals by 3.46 per cent and 16.88 per cent apiece.
The activity chart was led by volume on the second trading session of the week by GTCO with 65.9 million equities valued at N6.5 billion, Chams transacted 55.7 million shares worth N249.8 million, Custodian Investment traded 49.8 million stocks for N2.2 billion, Universal Insurance sold 36.1 million equities valued at N51.5 million, and Zenith Bank exchanged 35.4 million shares worth N2.6 billion.
By Adedapo Adesanya
The oil market was up by nearly 2 per cent on Tuesday after the United States shot down an Iranian drone approaching an aircraft carrier and armed boats in the Strait of Hormuz, stoking concerns talks aimed at de-escalating US-Iran tensions could be disrupted.
This action caused the Brent futures to rise by $1.03 or 1.6 per cent to $67.33 per barrel, as the US West Texas Intermediate (WTI) futures jumped by $1.07 or 1.7 per cent to $63.21 a barrel.
Both crude benchmarks dropped more than 4 per cent on Monday after President Donald Trump said Iran was seriously talking with America.
However, the US military shot down an Iranian drone that “aggressively” approached the Abraham Lincoln aircraft carrier in the Arabian Sea on Tuesday.
In the Strait of Hormuz between the Persian Gulf and the Gulf of Oman, Iranian gunboats approached a US-flagged oil tanker in what US and British maritime security sources describe as a failed attempt to interfere with the vessel’s transit.
Members of the Organisation of the Petroleum Exporting Countries (OPEC) including Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq export most of their crude via the strait, mainly to Asia. The Strait of Hormuz, through which roughly a fifth of the world’s oil supply passes, remains Iran’s most obvious pressure point.
Despite the latest development, the UAE urged Iran and the US on Tuesday to use the resumption of nuclear talks this week to resolve a standoff that has led to mutual threats of air strikes. Iran, meanwhile, is demanding that talks be held in Oman not Turkey.
In Ukraine, President Volodymyr Zelenskiy accused Russia on Tuesday of exploiting a US-backed energy truce to stockpile munitions, and using them to attack Ukraine a day before peace talks. This boosted worries that Russia’s oil would remain sanctioned for longer.
On Monday, President Trump announced a trade deal with India, one of the world’s biggest economies and oil importers, on Monday to cut tariffs to 18 per cent from 50 per cent in exchange for the country halting Russian oil purchases and lowering trade barriers.
The American Petroleum Institute (API) estimated that crude oil inventories in the US decreased by 11.1 million barrels in the week ending January 30. Crude oil inventories decreased by 247,000 barrels in the week prior.
Official data from the US Energy Information Administration (EIA) will be published later on Wednesday.
By Adedapo Adesanya
The Africa Finance Corporation (AFC), the continent’s leading infrastructure solutions provider, has reiterated its commitment to playing a pivotal role to support transformative reforms in Nigeria’s power sector.
This is as it act as co-Financial Adviser to the Nigerian government on the successful issuance of the recent N501 billion inaugural tranche under the Presidential Power Sector Financial Reforms Programme (PPSFRP), as part of the N4 trillion Power Sector Bond Programme, aimed at resolving over a decade of legacy debt obligations in Nigeria’s electricity supply industry and restoring financial stability across the sector.
AFC provided comprehensive financial advisory services to the federal government, including the design of the Programme’s negotiation strategy framework, support in negotiating and executing Settlement Agreements with Power Generation Companies (GenCos), and structuring the bond issuance. Working in partnership with CardinalStone Partners as co-Financial Advisers, AFC deployed its deep sector expertise and strong local market knowledge to deliver the landmark transaction.
The programme was overseen by the Presidential Power Sector Debt Reduction Committee (PPSDRC), with technical leadership from the Office of the Special Adviser to the President on Energy, and implemented through NBET Finance Company Plc, a special purpose vehicle of Nigerian Bulk Electricity Trading Plc (NBET). Proceeds from the issuance will be used to settle verified, overdue receivables owed to GenCos for electricity supplied between February 2015 and March 2025, injecting liquidity into the power sector and extinguishing long-standing claims.
Commenting on AFC’s involvement, Mr Banji Fehintola, Executive Board Member and Head, Financial Services at Africa Finance Corporation, said: “The successful issuance of the inaugural tranche under the Power Sector Bond Programme underscores AFC’s commitment to supporting transformative reforms in Nigeria’s power sector. By resolving long-standing liquidity challenges and restoring confidence among investors and operators, this transaction lays the foundation for sustainable growth and improved electricity supply across the country.”
When fully implemented, the programme is expected to impact approximately 5,398MW of electricity generation capacity by Nigerian GenCos and finalise settlement for 290,644.84GWh of electricity billed since 2015. It will also strengthen companies serving about 12 million active registered customers, creating a solid platform for new investments in capacity enhancement and expansion.
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