The zero budget allocation to the Securities and Exchange Commission has become a major threat to the activities of the apex market regulator. Sources close to SEC told our correspondent on Wednesday that the commission was already facing some difficulties in carrying out some of its regulatory and oversight functions in the capital market.
One of the sources, who declined to have her name in print because she was not permitted to speak on the issue, said some of the reform projects and road shows, which the commission was to embark upon, had been left unattended to due to the zero budget allocation.
She said, “Presently, a lot of activities aimed at improving the capital market, which SEC should have undertaken, have yet to commence because of the zero allocation.
“You know that SEC has a lot of oversight functions to play as the apex regulator of the capital market, and every year end, we come up with programmes and make plans on things to do the next year aimed at building up and improving the market in the New Year.
“But since this year began, we have not been able to kick off some of those projects, which include investor education and enlightenment programmes, road shows and reforms programmes because of the zero allocation.”
The House of Representatives had refused to allocate any money to SEC in the 2013 budget as a result of the face-off that ensued between the lawmakers and the Director-General of the commission, Ms. Arunma Oteh, last year when the House Committee on the Capital Market investigated SEC.
The DG had accused the committee of being unnecessarily harsh on her because she refused to release money for the conduct of the probe and bribe some of the members.
The committee subsequently found her guilty of serious infractions and recommended her sacking, a position that was endorsed by the whole House, which passed the recommendation to the Executive.
However, President Goodluck Jonathan’s refusal to fire Oteh made the lawmakers to not appropriate any money for SEC in the 2013 budget.
Capital market analysts have, however, called on the Presidency to intervene in the face-off between the National Assembly and the management of SEC.
A source close to the SEC DG, however, said the zero allocation was an attempt to frustrate the market recovery efforts of the commission, which had been yielding positive results in the last few months.
He said that as a result of the reforms carried out by SEC in the last two years, the capital market closed 35 per cent higher in 2012, with the bourse being named one of the top five best performing in the world.
The source said, “It is obvious that the market has recorded impressive turnout in the last few years owing to the efforts of the current DG as we have seen an influx of both foreign and local investors into the market in the period.
“Also, there has been increased interest by the local investors, who seemed to shy away from the market following the losses they incurred in the wake of the global financial meltdown.
“All these were as a result of the reforms undertaken by the management of SEC led by the DG, and we used funds to carry out these things and still need adequate funding to ensure that we continue with this so that the market can take its place as the economic barometer it should be.”
He said it was essential for the Federal Government to step in and resolve the issue as soon as possible.
Speaking on the matter, the President, Association of Stockbroking Houses of Nigeria, Mr. Emeka Madubuike, said if not properly handled, the issue could fast erode investor confidence in the capital market.
He said, “Of course, we do not need anyone to tell us that issues like this can affect the running of the market negatively. We at ASHON believe that this issue should be resolved quickly so that our market will not suffer losses like we experienced in the past.
“If SEC as an institution is not performing its functions of market development and regulation well, it will begin to affect our market at a point and we do not want this to be the case because everyone has worked hard to bring the market to the point where it is now.
“What we would expect is that the institution should be separated from the individual. I think a major problem, which we have in this country is that we tend to build individuals and not institutions. But the reverse should be the case.”
Madubuike added that it was important for the President to step in and address the issue properly so that investors and the investing public would be better for it.
The Managing Director, Lambeth Trust and Investment Limited, Mr. David Adonri, said it was unfortunate that the National Assembly decided to take such an action against the commission, adding that it was not good for the development of the market.
He said, “The purpose of granting zero budgetary allocation to SEC by the assembly is to cripple the commission in order to force out the DG. However, the truth remains that SEC is the police for the capital market. You can imagine what it will be like if a city does not have policemen to maintain law and order.”
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