SEC to enhance framework for government, corporate borrowing

Securities and Exchange Commission (SEC) has expressed its commitment to enhancing the regulatory framework for borrowing by governments and corporate entities.

SEC’s Director-General, Dr Emomotimi Agama, said this in a statement issued on Wednesday in Lagos.

He explained that this move became essential following the recent Supreme Court order mandating direct subvention from the Federal Government to the 774 Local Government Areas.

Agama noted that borrowing plays a critical role in the financial system.

He said, “Improving the framework for borrowing is very important because borrowing is an integral part of the financial system. We can only achieve the progress we aim for if there is enough funding

“Hence, we want to be sure of sustainability in both government borrowing: municipal and state governments.

“It is therefore important that we manage such resources, via strategic and focused borrowing to help the developments in those sectors.”

According to him, for corporates, the commission is changing the landscape with the new rules on Central Counter Parties(CPPs).

Agama added that the new rules on CCPs had become critical for Nigeria’s development, especially for corporates in raising capital.

The director-general stated that as a commission, SEC established those new rules to function in 2025.

“We want to make borrowing a seamless and effortless process for Nigerian companies.

“It is very important that as we drive the growth of the Nigerian capital market. We will also drive new products and new opportunities for every Nigerian,” he said.

Agama added that Nigeria had long been viewed as a mono-product market, but noted that 2025 would be different, as SEC would continue driving the introduction of derivatives into the capital market.

He further said that achieving this goal might not be feasible without the necessary laws and regulations that would enable the commission to perform its duties more effectively.

To foster confidence in derivatives trading, the SEC chairman expressed optimism about providing a clear framework for these transactions.

This, he added, includes exempting such transactions from general insolvency laws, thereby creating a safer and more predictable trading environment.

According to Agama, the commission is creating a safer trading environment, building confidence and attracting more players to the market, hence it must provide enabling regulations and laws.