Economy
SEC Seeks Innovative Financial Products for Pension Industry
By Aduragbemi Omiyale
The Director-General of the Securities and Exchange Commission (SEC), Mr Lamido Yuguda, has called for more innovative financial products to meet the needs of the pension industry in Nigeria so as to deepen the capital market and sustain the growth in the sector, especially in the non-interest segment.
Mr Yuguda made this call at a one-day seminar organised by the agency themed The Imperative of Non-Interest Capital Market for Pension Industry.
According to him, the non-interest finance segment holds great potentials in furthering the development of the capital market and the growth of the nation’s economy as it is one of the most appropriate for the funding of long-term infrastructure.
He described the pension industry as one of the fastest-growing in the nation’s economy with assets under management of N13 trillion as at the end of September 2021 adding that of this impressive amount, less than N80 billion is invested in Sukuk, representing a little less than one per cent of total pension assets under management.
“This calls for more innovative financial products to deepen our market and sustain the growth in the industry, especially in the non-interest segment.
“We strongly believe that the capital market has a leading role to play in this regard by providing a variety of long-term investable products to service the needs of the pension industry as well as other investors with a similar focus.
“It is encouraging that the national pension commission has taken concrete steps to improve the regulatory framework for the investment of pension funds in the non-interest capital market by the introduction of an operational framework for the non-interest fund.
“This will no doubt provide an additional opportunity for retirement savings account holders and retirees to invest their savings in financial instruments that are aligned with their lite goals and objectives.
“Indeed, the operationalization of the funds definitely accelerates the national financial inclusion agenda while increasing the quantum of investible funds by unlocking the untapped capital,” he said.
Mr Yuguda stated that as of September 2021, the total assets stood at N7.79 billion constituting about 0.059 per cent of total pension assets under management expressing the hope that the fund assets will grow with robust public awareness, education programs and capacity building of stakeholders through seminars, workshops and programs such as this.
“The SEC in the realisation of the potential of the noninterest segment of the capital market has a veritable avenue for providing long-term capital launched its 10-year capital market masterplan with a very strong focus on the development of the non-interest capital market segment through awareness creation, capacity building, review of regulatory framework and development of non-interest projects and services.
“I am happy to report that a significant number of its strategic initiatives have been achieved as several sharia/ethical funds have been registered by the SEC.
“In addition, the SEC collaborated with the MO towards providing a framework for the issuance of the first FGN Sukuk in 2017 and two other issuances of Sukuk have followed.
“However, we believe that more work still needs to be directed towards achieving other critical initiatives of non-interest in our capital market plan.
‘At SEC, we have been approached by a number of potential corporate issuers of scope and we have registered the first issuer of scope, we are aware that a number of corporate issuers are interested in issuing Sukuk, but some of them have noted that they will like clarity on the neutrality of the Sukuk vis-a-vis corporate bonds.
“The increased supply of scope will hasten the development of the non-interest capital market because I am confident that the non-interest finance experts gathered here today will invoke the interest and attention of participants and enhance their knowledge of the subject to eventually lead to the birth of promoters and on takers of non-interest products of the capital market,” he added.
In a goodwill message, the Director-General of the National Pensions Commission (PenCom) Ms Aisha Dabir Umar, commended the SEC for organising this webinar.
The PenCom chief, represented by the Commissioner Administration, Mr Umar Farouk Aminu, acknowledged the collaborative efforts of the two agencies which have over the years laid acceptable values and good governance standards in their investments of pension funds in the Nigerian capital market.
“As you may be aware, PenCom recently released a list of operational guidelines for non-interest funds. It is our belief that this singular act will promote financial inclusion in Nigeria, and particularly drive enrolment in the macro pension fund. It is my call that industry practitioners gathered here will come up with practical measures to facilitate the issuance of non-interest instruments in the market.”
She stated that PenCom remains resolute in ensuring that all instruments meet this requirement before pension investment and commended the collaboration between PenCom and SEC towards deepening the capital market to sustainably introduce non-interest products.
In his remarks, the Secretary-General of the Islamic Financial Services Board, Dr Bello Danbatta, said Islamic finance is a complementary system adding that no system would be able to develop without integrating it into its financial system.
“Sustainable finance is not complete without integrative finance and integrative finance is only possible when you have non-interest and interest-based finance,” he stated.
By Adedapo Adesanya
The Naira continued its appreciation against the Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Tuesday, April 14, by N12.42 or 0.92 per cent to close at N1,343.77/$1 compared with the preceding day’s N1,356.19/$1.
In the same vein, the local currency gained 58 Kobo against the Pound Sterling in the spot market during the session to settle at N1,824.57/£1 versus Monday’s closing value of N1,825.15/£1, and appreciated against the Euro by N2.18 to N1,585.51/€1 from N1,587.69/€1.
Similarly, the Naira strengthened its value against the US Dollar at the GTBank forex counter yesterday by N2 to quote at N1,371/$1, in contrast to the previous session’s N1,373/$1, and at the black market, it improved by N5 to trade at N1,380/$1 compared with the N1,385/$1 it was transacted a day earlier.
Interbank liquidity increased sharply to N141.315 million across 175 deals, according to the FX update published by the Central Bank of Nigeria (CBN), a 260 per cent surge from N38.256 million the previous day.
High FX inflows, boosted by foreign portfolio investors’ funds channelled into OMO bills, increased demand for Naira.
Credit rating agency, Fitch, projected that Nigeria’s FX reserves may fall to $47 billion over mounting fiscal pressures, predicting that Nigeria’s budget deficit could widen to nearly five per cent of Gross Domestic Product (GDP).
The forecast comes amid continued reforms by the central bank aimed at stabilising the FX market, including measures to ease restrictions on the repatriation of oil export proceeds by international oil companies.
According to Fitch, these reforms have supported a “gradual normalisation” of the FX market and improved investor confidence, although structural weaknesses continue to weigh on the economy.
As for the cryptocurrency market, profit-taking by investors occurred amid signals of renewed US-Iran talks and growing expectations of Federal Reserve rate cuts later this year, which are projected to add liquidity and support risk assets, including digital currencies.
Optimism that the US and Iran will enter a second round of talks in the coming days has kept crude oil below $100 a barrel, easing the inflationary overhang that weighed on markets through March.
Solana (SOL) slumped by 3.1 per cent to $83.03, Ethereum (ETH) declined by 1.8 per cent to $2,318.70, Cardano (ADA) fell by 1.1 per cent to $0.2393, Ripple (XRP) dropped 0.7 per cent to $1.35, and Bitcoin (BTC) depreciated by 0.5 per cent to $74,019.75.
However, TRON (TRX) appreciated by 0.6 per cent to $0.3232, Dogecoin (DOGE) added 0.3 per cent to trade at $0.0933, and Binance Coin (BNB) rose by 0.1 per cent to $613.93, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
By Dipo Olowookere
The bulls consolidated their dominance on the Nigerian Exchange (NGX) Limited on Tuesday after closing higher by 0.67 per cent, stretching the year-to-date return to 32.27 per cent.
It was observed that the key sectors of Nigeria’s stock exchange witnessed buying pressure, with the energy space expanding by 4.35 per cent, the banking index growing by 1.97 per cent, the industrial goods counter rising by 0.71 per cent, the insurance segment increasing by 0.65 per cent, and the consumer goods landscape up by 0.14 per cent.
Consequently, the All-Share Index (ASI) advanced by 1,372.52 points to 205,831.38 points from 204,458.86 points, and the market capitalisation chalked up N883 billion to close at N132.492 trillion compared with Monday’s N131.609 trillion.
There were 40 price gainers and 20 price losers yesterday, indicating a positive market breadth index and bullish investor sentiment.
Stanbic IBTC appreciated by 10.00 per cent to N161.70, Ecobank gained 10.00 per cent to sell for N50.60, NGX Group improved by 9.97 per cent to N168.75, Cornerstone Insurance added 9.94 per cent to quote at N5.64, and Mecure soared by 9.92 per cent to N67.60.
On the flip side, Fortis Global Insurance lost 8.20 per cent to trade at N1.12, McNichols depreciated by 8.17 per cent to N6.52, Academy Press slipped by 6.96 per cent to N7.35, International Energy Insurance dipped by 6.88 per cent to N3.25, and Guinea Insurance contracted by 5.83 per cent to N1.13.
During the session, market participants transacted 569.3 million shares valued at N32.3 billion in 45,777 deals versus the 470.0 million shares worth N32.5 billion traded in 60,793 deals the previous session, implying a jump in the trading volume by 21.13 per cent, and a slip in the trading value and number of deals by 0.62 per cent and 24.70 per cent, respectively.
The most active stock for the day remained Access Holdings with 67.5 million units sold for N1.8 billion, Zenith Bank traded 39.7 million units worth N4.5 billion, VFD Group transacted 37.6 million units valued at N423.0 million, GTCO exchanged 30.6 million units for N3.8 billion, and Lasaco Assurance transacted 26.3 million units worth N52.6 million.
By Adedapo Adesanya
Crude prices dropped on Tuesday on hopes Iran will resume talks with the US and Israel to end the conflict that has shut the Strait of Hormuz.
Brent crude futures settled at $94.79 a barrel after losing $4.57 or 4.6 per cent, and the US West Texas Intermediate crude finished at $91.20 per barrel after it shed $7.80 or 7.87 per cent.
Talk of a resumption in US-Iran discussions put downward pressure on prices, ignoring the loss of physical barrels of oil that are not moving.
Reuters reported that negotiating teams from the US and Iran could return to Islamabad, Pakistan, this week amid continued engagement on trying to achieve an agreement.
The International Energy Agency said in its monthly report that attacks on energy infrastructure in the Middle East and Iran’s effective closure of the Strait of Hormuz have led to the largest oil supply disruption in history. It said over 10 million barrels per day were lost in March.
The IEA said resuming flows through the Strait of Hormuz remains the single most important variable in easing the pressure on energy supplies, prices and the global economy. The waterway is used for transporting crude and refined products, largely to Asia.
The IEA sharply cut its forecasts for global oil supply and demand growth, with the demand growth forecast for 2026 trimmed by 80,000 barrels per day and supply now expected to decline by 1.5 million barrels per day.
The US military said on Monday that its blockade of the Strait of Hormuz would extend east to the Gulf of Oman and the Arabian Sea. With two ships reportedly turned around in the strait as the blockade started. However, three Iran-linked tankers entered the Gulf and were allowed to pass because their destinations were not Iranian ports.
Iran threatened to respond to the blockade by attacking ports in nations bordering the Gulf.
Before the outbreak of the US-Iran war in late February, around 130 vessels transited the Strait daily. Traffic has since slowed to a trickle, and ships must now navigate both US naval oversight and Iranian directives.
The American Petroleum Institute (API) estimated that crude oil inventories in the US rose 6.10 million barrels in the week ending April 10. In the week prior, US crude oil inventories rose by 3.719 million barrels. Official data from the Energy Information Administration (EIA) will be released later on Wednesday.
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