VICTOR OGIEMWONYI
The recent resignation of Mallam Musa Al Faki the immediate Director General of Securities and Exchange Commission (SEC) was a bit of a surprise. Despite the blame heaped on the regulators, they were blamed unfairly for the things they had little control over, like in other markets, the public every where usually blamed regulators and operators when things go wrong. Even when it is apparent, It was investors who made the bad
judgments. Recent SEC committee review of the market confirms this position. They did not reveal anything earth shaking that the regulators could have done, that they did not do. There were some misjudgments for sure, and in some cases weakness to act, but by and large, they did their best. Though there were a few other gaps, It was the rapid growth of the market more than anything else that stretched and exposed regulators and the market to what weakness that needs ratification .The rapid growth in prices and the Increased issuance of securities, particularly, the banks that came to the market continually to raise money, quickly exposed the weakness in the issuance process that saw, the usual issuance time table slow down considerably, in some cases, for up to 12 months from the usual average period of 12 weeks between when the offer opens and when it closes. The market was unable to manage its success. The natural reaction of any one not prepared for such rapid change was to panic.
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Regulators made panicky statements that eventually upset the market. The last Director General ( DG) Musa Al-Faki did the best he could. He should be happy that no matter what anyone says, his tenure witnessed rapid development of the market. There was unprecedented growth in all areas, and should pat himself on the back for the successful handling of the banks and Insurance Industry Consolidation, which was successfully concluded. The Introduction of E-Bonus, E-Dividend, were all monumental achievements he should be proud of. His weaknesses pale in comparison to these stated achievements above.
Al-Faki was a product of the market, and coming from the stockbroking community, he was sometimes caught between being firm as a regulator and doing us favours as his friends. As one broker put it, Al-Faki is being blamed for favours we asked him to do for us. He was a good person and sometimes bad things happen to good people.
The next D.G of SEC must possess all of Al-Faki’s qualities and more. The new D.G must be fair, but firm in his or her decisions. He or She must be somebody who understands the market, we don’t have time for experiments and learners The Capital Market is generally known as the creative area of finance, It continually innovates and offers sophisticated instruments which the regulator must be abreast of, If it is to be registered as a security offerable to the investing public. The bottom line is, that the business is a knowledge business and only those with the requisite technical knowledge should be appointed the new D.G of SEC.
The recent melt down in the market here and abroad, has brought to fore, the importance of capital markets to all aspects of our lives. We now know that whether you are an investor or not, the activities in the market impacts on everyone.
The capital market fund raising function, which allows government and large companies to raise money that is used in development and creating employment which create taxes, is clearly one function that can not easily be toyed with. The last banking and insurance industry consolidation would never have been possible if we did not have a functioning capital market.
The capacity to also create wealth has never been in doubt. The rapidity, with which it can create and spread wealth, was what became obvious in the last 2 years. Nigeria witnessed rapid development of its middle class, a class that has almost disappeared in the last 2 decades.
It is for these important reasons that the next appointment will be crucial. The market expects the new D.G to be a serious person with a world view and clear understanding of the role and the importance of regulating the market.
Ordinarily the current acting D.G would be seen as a shoe in, given her experience and the respect the market accords her. But then, this is Nigeria, where square pegs are forced into round holes and we then expect a miracle.
The recent appointment of the New CBN Governor, Mallam Sanusi Lamido Sanusi was seen by many analysts as a step in making sure that only competent people get important jobs, no matter where you come from. Federal character has run its course and should be allowed to die a natural death. In a world of merit, sacrificing competence for silly geopolitical consideration in important jobs, that requires technical competence, and good market understanding will be travesty; putting in people that will be learning on the job is definitely what we do not need.
The new D.G must be a professional that the market respects and ready to be fair, firm and can quickly implement the needed changes that will ensure the market resumes on the growth part that we are all now looking to see.
There is so much at stake, political job seekers and those who do not have much to offer should please stay away.
