SEC, DMO to partners collaborate on Development of Bond Market

The Securities and Exchange Commission (SEC) and the Debt Management office Nigeria (DMO) assures greater collaboration to ensure that funds raised by State Governments from the Capital Market are properly utilized.

Mounir Gwarzo, SEC Director General

Mounir Gwarzo, Director General of SEC, gave this assurance when the Director General of DMO, Dr. Abraham Nwankwo visited him in his office in Abuja Wednesday.

Gwarzo said the utilization of funds raised from the market is very important hence the Commission has taken monitoring of the utilization of issue proceeds to the highest level.

He said “The public seems to think that money is not well utilized but I want to assure you that at SEC, utilization is very key and our inspection is at a very high level. What we have done is to create a committee rather than allow a particular Division to do that and the membership of the committee is drawn from various departments to leverage on different experiences.

“For the states that have come to the market, already one or two states have been visited and we have already restructured the inspection teams now. Instead of having only one team, we now have three teams and we gave them the mandate that from now till December, all those states have to be inspected. We have the previous inspections reports and anytime you need them, we can share with you so that you too can have the information.

Gwarzo restated the commitment of the Commission in implementing the 10 Year Master Plan one of whose key objectives is to revive and transform the Bond Market.

“The Bond market at the national level seems to be doing well, a few years ago when the Corporate bond market was a little bit very active and the FGN Bond was not too active, we were in the vanguard of propagating that government should come in, now government has become very dominant and some of us are thinking that maybe it is crowding out the corporate.

In terms of waivers, Gwarzo solicited the support and co-operation of DMO as he expressed the need to be carried along in order to be on the same page.

“we want to be carried along, we want the market to see us as one, we don’t want a situation whereby certain waivers are given by DMO and those waivers are not in line with our laws, by the time we co-ordinate very well, some of these things will be smoothened out” he added.

Speaking earlier, the DG DMO Nwankwo, said one of the purposes of the visit is the need to relate and work closely from time to time to achieve set goals and assured the SEC of DMO’s support to maintain a good relationship.

“I think that is an area we need to work very closely on given the emerging realities. As you are aware of recent, states are under tremendous financial stress and in respect of their bank loans, you are aware of the initiatives government approved for us to take to reduce the pressure of bank loans on them.”

“However, the other big leg of course is the Bond, their indebtedness to the capital market as against their indebtedness to the banks, even if you want to deal with them; it is a little more complicated. First of all because they went through your regulatory procedures and rightly so and appropriately so and secondly in that case, they are just not owing one bank. It is not just one state owing a bank but a state owing as much as 1000 depending on the number of investors that participated, so it is a little more complex.

He disclosed that this collaboration is important particularly in recent times when many stakeholders are getting concerned about the propriety of utilization of the proceeds of money raised from the capital market.

“Again that is an area we need to work closely with SEC. it is completely under the purview of SEC to make sure that money raised from the capital market through issuance of Bonds in particular, whether by Corporate or by Sub Nationals are well monitored, the projects and utilization of proceeds are well monitored.

He renewed the commitment of both agencies in ensuring that they deliver maximally to the development of the economy using their limited platforms through closer co-operations among each other to achieve set objectives.