Modupe Gbadeyanka
By Aduragbemi Omiyale
The need for the development of a liquid government bonds market has been emphasised by the Securities and Exchange Commission (SEC).
The Director-General of SEC, Mr Lamido Yuguda, while speaking at the 2022 conference of the Capital Market Correspondents Association of Nigeria (CAMCAN), stated that this would have a positive effect on the economy.
Mr Yuguda, represented by the Executive Commissioner of Operations of the agency, Mr Dayo Obisan, disclosed that a liquid government bonds market implies that there is a sufficient offering of government bonds across a range of maturities, which is key to the construction of the benchmark yield curve (which is important for the establishment of the market-based risk-free interest rate used in equity pricing).
He further stated that the synergistic relationship between the government bonds and equity markets had been observed in several East Asian economies, which experienced a surge in private investment and equity market capitalisation following the establishment of a liquid debt securities market.
“At the same time, an increase in government expenditure funded by debt crowds out private investment, which in turn adversely affects aggregate expenditure and, consequently, economic growth with implications for the capital market.
“In addition, an underdeveloped capital market will affect institutional investors negatively, restraining the amount and maturity of funding available to the government locally,” the DG said at the programme tagged Nigeria’s Public Debt and the Capital Market.
At the event held in Lagos over the weekend, Mr Yuguda stated that as the apex regulator of the capital market, SEC is committed to creating an enabling and facilitative oversight and regulatory framework supportive of the deepening and development of the Nigerian capital market.
“As you are aware, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, launched and unveiled the revised Nigerian Capital Market Master Plan 2021-2025.
“The updated master plan underscores the commission’s commitment to deepening and repositioning the financial market as a key anchor of our economy.
“The Master Plan, which represents collective aspirations of the capital market community, is focused on driving initiatives geared towards growing and deepening the Market with the ultimate goal of accelerating the emergence of our Country into the top 20 global economies by the year 2025,” he stated.
He disclosed that the capital market is more resilient and is on a steady growth trajectory, adding that capital market correspondents have contributed to the development of the market and expressed delight at their partnership with the agency in this noble task of developing and deepening the capital market.
According to him, the reporters have taken on an increasingly important role of communicating to the public some of the commission’s initiatives aimed at developing the market, noting that SEC is committed to supporting efforts aimed at addressing financial literacy and empowerment gaps within society.
“There is no doubt in my mind that, the capital market presents a good platform for addressing many of Nigeria’s economic challenges.
“On our part as regulators, we shall continue to introduce new ideas and policies towards developing and regulating a capital market that is dynamic, fair, transparent and efficient to contribute to the nation’s economic development.
“We will also continue to fulfil its mandate of protecting investors and creating an enabling environment for market operators.
“Policymakers and practitioners alike are keen to understand the complex nexus between the public debt market and the Nigerian capital market,” he added.
In her remarks, the chairman of CAMCAN, Mrs Chinyere Joel-Nwokeoma, said that the annual workshop was part of the association’s contributions to the development and growth of the nation’s economy by bringing regulators, operators and company executives to discuss economic issues that affect the market in particular and the economy in general.
She said that the theme was picked because of concerns in different quarters concerning the nation’s rising total debt stock, which stood at N42.80 trillion as of June 2022.
