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SEC Records 96% Compliance Level of Prudential Returns in 2022



Investment and Securities Bill

By Aduragbemi Omiyale

The Securities and Exchange Commission (SEC) has stated that it has continued to employ its compliance tool to ensure that only fit and proper capital market operators practice in the market.

This, the commission said, has resulted in an improved level of compliance with the filing of prudential returns, rising to 96 per cent in 2022 compared with 81 per cent in 2021.

The Director-General of the agency, Mr Lamido Yuguda, described this in an interview as a welcome development, given the organisation’s quest to pursue a capital market that is based on the principles of increased transparency, efficiency and global competitiveness.

He described the year 2022 as another eventful year in which the commission continued its implementation of sound initiatives that are expected to bring about the much-desired market development that would deepen not only the market but also ensure the continued protection of investors.

“SEC released guidelines on the implementation of Sections 60-63 of the Investments and Securities Act 2007.

“The NCMI organized training for CEOs, CFOs and other officers of public companies to facilitate their compliance. The Commission also provided filing options for Audited (Annual) and Fourth Quarter Financial Statements.

“The commission has conducted the Risk Based Supervision (RBS) examination on 20 capital market subsidiaries of five financial holding companies aimed at supporting the entire financial system stability.

“To further protect investors and boost confidence in the market, the commission has commenced implementation of 100 per cent custody requirement on all Collective Investment Schemes (CIS).

“Also, after a thorough review of the status of privately managed funds, SEC mandated that Rule 95 should also apply to all Discretionary/Non-Discretionary Portfolios and Products to ensure the protection of investors’ funds in the fund management space,” Mr Yuguda stated.

The SEC DG disclosed that a comprehensive on-site inspection exercise was successfully carried out on the 95 registered fund managers to ensure that both the public and private funds registered by the commission are being operated in line with the relevant rules and regulations.

On non-interest, Mr Yuguda stated that the commission, working jointly with the Federal Inland Revenue Service (FIRS), the Non-Interest Finance Committee of the CMC and other stakeholders, has developed a taxation regulation on non-interest finance.

The non-interest finance (taxation) regulation, he stated, has been approved by the Minister of Finance, Budget and National Planning and has already been gazetted. This is a positive development that will spur investments in non-interest capital market products.

He disclosed that the Nigerian capital market witnessed significant momentum, with the main equity bourse (NGX) recording a N6.1 trillion increase in the equities capitalisation, from N21.82 trillion on December 31, 2021, to N27.96 trillion as of December 30, 2022, representing a 28 per cent increase, outshining most of the global securities markets.

The NGX All-Share Index also recorded a 19.98 per cent year-on-year growth from 42,716.44 points on December 31, 2021, to 51,251.06 points as of December 30, 2022.

“On the debt side of the capital market, the S&P FMDQ Sovereign Bond Index closed at 592.84 points on December 14, 2022, indicating a 4.8 per cent increase from 565.67 points in December 2021.

“The market witnessed this despite relatively weak corporate earnings, investor apathy and slow economic growth.

“However, we expect to see enhanced growth in 2023 driven by initiatives that target improvement in the business environment, increased liquidity, and a possible increase in sovereign bond issuances to finance the budget deficit,” he remarked.


Nigeria’s Debt Profile Jumps 17% to N46.25trn in 2022



debt profile

By Adedapo Adesanya

Nigeria’s total public debt stock increased by 17 per cent to N46.25 trillion or $103.11 billion as of December 2022 from N39.56 trillion or $95.77 billion in 2021.

This information was revealed by the Debt Management Office (DMO) on Thursday.

This means that the country’s debt profile precisely increased by 16.9 per cent or N6.69 trillion or $7.34 billion within one year, as the government borrow funds from various quarters for its budget deficits.

The agency said the new figures comprise the domestic and external total debt stocks of the federal government and the sub-national governments (36 state governments and the Federal Capital Territory).

The DMO statement partly read, “As of December 31, 2022, the total public debt stock was N46.25 trillion or $103.11 billion.

“In terms of composition, total domestic debt stock was N27.55 trillion ($61.42 billion) while total external debt stock was N18.70 trillion ($41.69 billion).

“Amongst the reasons for the increase in the total public debt stock were new borrowings by the FGN and sub-national governments, primarily to fund budget deficits and execute projects. The issuance of promissory notes by the FGN to settle some liabilities also contributed to the growth in the debt stock.

“On-going efforts by the government to increase revenues from oil and non-oil sources through initiatives such as the Finance Acts and the Strategic Revenue Mobilization initiative are expected to support debt sustainability.”

“The total public debt to gross domestic product (GDP) ratio for December 31, 2022, was 23.20 per cent and indicates a slight increase from the figure for December 31, 2022, at 22.47 per cent.

“The ratio of 23.20 per cent is within the 40 per cent limit self-imposed by Nigeria, the 55 per cent limit recommended by the World Bank/International Monetary Fund, and the 70 per cent limit recommended by the Economic Community of West African States,” the debt office said.

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12-Month Treasury Bills Now 14.74% as Appetite Falls



Treasury Bills

By Dipo Olowookere

The 364-day treasury bills stop rate was raised by the Central Bank of Nigeria (CBN) at the primary market auction (PMA) on Wednesday by 5.25 per cent as appetite for the asset class waned.

The central bank, which conducted the exercise, did not record the usual hunger for the debt instrument by investors yesterday, ostensibly because of how the bank had tinkered with the rates in the previous exercises.

But the apex bank surprised subscribers at the PMA on Wednesday when it jerked the rate higher to 14.74 per cent from the 9.49 per cent it cleared in the previous PMA.

According to details of the exercise, the CBN auctioned the one-year bill worth N139.96 billion and received subscriptions valued at N165.28 billion, allotting N142.16 billion.

Business Post reports that it was not only the 12-month dated instrument that enjoyed the rate hike yesterday as the two others benefitted.

The central auctioned N3.34 billion worth of the 182-day bill during the session but had investors stake N1.56 billion on it, with N1.56 billion allotted to successful bidders at 8.00 per cent compared with the previous session’s 5.00 per cent, indicating an increase of 3.00 per cent.

As for the 91-day bill, the rate cleared at 6.00 per cent after it was moved higher by 3.45 per cent from 2.55 per cent. This was after the apex bank allotted N1.75 billion to subscribers, the same amount of bids it received from the N2.16 billion taken to the market on Wednesday.

Recall that some days ago, the Monetary Policy Committee (MPC) of Nigeria’s central bank increased the Monetary Policy Rate (MPR), which is the benchmark interest rate in the country, by 0.50 per cent to 18.00 per cent.

The team explained that the rate hike was mainly to tame rising inflation in Nigeria, which the National Bureau of Statistics (NBS) said stood at 21.91 per cent in February.

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China’s Investment in Africa Has Cut Need for Loans from World Bank, IMF—Osinbajo



China's investment in Africa

By Adedapo Adesanya

The Vice President of Nigeria, Mr Yemi Osinbajo, has lauded China’s investment in Africa, saying it has reduced dependency on loans from Bretton Woods, which consists of the World Bank and the International Monetary Fund (IMF).

In a statement seen by Business Post, the VP, at an event at King’s College London on March 27, 2023, stated that “China shows up where and when the West will not and or are reluctant.”

He said this was evident in the investment of the Asian giant in Africa, which he said stood at $254 billion in 2021, about four times the volume of US-Africa trade.

He also noted that, “China is the largest provider of foreign direct investment, supporting hundreds of thousands of African jobs. This is roughly double the level of U.S. foreign direct investment, adding that, “China remains by far the largest lender to African countries.”

He also noted that Chinese companies had taken the lead in exploiting minerals in Africa, many now in lithium mining in Mali, Ghana, Nigeria DRC, Zimbabwe and Namibia.

The Nigerian second-in-command said that China has always shown up for African countries while outrightly condemning Western countries in that regard.

He said, “Most African countries are rightly unapologetic about their close ties with China. China shows up where and when the west will not or are reluctant.”

He added, “And many African countries are of the view that the beware of the Chinese Trojan loans advise forming the west is wise but probably self-serving,” explaining that, “Africa needs the loans and the infrastructure. And China offers them. In any case, the history of loans from Western institutions is not great.”

Taking a step further, Mr Osinbajo sent a salvo to the World Bank and the IMF over the conditions attached to their loan facilities.

“The memory of the destructive conditionalities of the Bretton Woods loans is still fresh, and the debris is everywhere.

“And the preoccupation of western governments and media with the so-called China debt trap might well be an overreaction,” he added.

“I recommend an eye-opening lecture by Professor Deborah Brautigam about two weeks ago at Jesus College Cambridge.

“The truth, as she points out, is that all of the Chinese lendings to Africa is only 5 per cent of all outstanding public and publicly guaranteed debt in low and middle-income countries, compared to 23% held by the World Bank and other multilaterals.”

He alluded that Chinese lenders account for 12 per cent of Africa’s private and public external debt.

“And the Chinese have also been there when the debts cannot be paid. In early 2020 as COVID battered African economies, China came together with other G20 members to launch the Debt Service Suspension Initiative (DSSI).

“About 73 low-income economies benefited from the suspension of principal and interest payments. Chinese banks provided 63 per cent of the total debt relief while being only owed 30 per cent of the debt service payments due,” he quipped.

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