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SEC faults 2017 budget appropriation, analyses negative impact on capital market

By Jide Ajia

Despite delay that characterized passage of 2017 budget, the Security and Exchange Commission (SEC) has picked holes in appropriation of the yearly spending plan that, it has harmful effects in operation of the Capital Market.

SEC, the apex regulator of Nigerian Stock Exchange (NSE), disclosed the economic undesirable effects while briefing finance and investment journalists after at its quarterly Capital Market Committee Meeting (CMC) held on Wednesday in Lagos.

The Director General, SEC, Munir Gwarzo, said indirect effects of budgets on the capital market could be negative when the federal government put upward pressures on inflation and interest rates, or cause uncertainties in the foreign exchange market.

He hinted further that inflation spiral could be a cause and consequence of exchange rate bubbles and the net effect of such pressures could be negative on the stock market, if urgent attention was not paid to correct it.

Gwarzo stressed the commission has looked at the theoretical links between the capital market and budget with the aid of historical microeconomic data for Nigeria, adding that expenditure has correlated with the nation’s Gross Domestic Product (GDP) growth.

He, however, recommended the federal government to keep a tab on deficit financing, adding that high budget deficits tends to increase cost of borrowing for any given country.

The SEC boss also canvassed that investor education efforts particularly on the role of capital market in economic development should be strengthened and widened to include targeting the policy makers, practitioners and academics.

In addition, Gwarzo averred that the National Pension Commission and Pension Funds Administrators (PFAs), should take active steps to encourage creation of pension investments portfolios that were more diversified by exposing younger workers to take a greater percentage of equities since they have a longer time horizon to invest.

The Head, Vertical Market Group, Nigerian Inter-Bank Settlement System (NIBSS), Samuel Goriola Oluyemi, on e-dividend mandate, stated that registrants stood at 2.1 million, while investors captured through NIBSS account currently stands at 838.68 million and total unique investors identified through Bank Verification Number (BVN) moved to 433.16 million.

While given further analyses of active investors in Nigerian capital market through e-dividend mandate, Oluyemi explained the ratio of male to female investors in the country was approximated at 2 to 1, while male investors constituted 65 per cent, the female counterpart contributed 35 per cent.

Oluyemi also disclosed to the financial press that investment statistics based on states of residence showed that investors in Lagos contributed 38 per cent, followed with Abuja based investors with eight percent and Rivers (6 per cent), Ogun and Oyo State (5 per cent) respectively.

Other investment statistics based on state of origin included investors who hailed from Anambra (10 percent), Imo (9 per cent); Ogun (9 percent); Delta (7 per cent) and Edo State contributed six per cent to the investment window.

Based on nationality, the NIBSS expert stated that investors in Nigeria, based on figures, were put at 421.37 million; Indian (146m); British (142m); Ghanaians (109); Lebanese (46m) and American investors in Nigeria capital market were 32 million.

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