Barring last minute change, the House of Representatives will soon initiate investigation into the collapse of Nigerian capital market between 2008 and 2009.
Investigations revealed that the unprecedented crash of stocks was caused by global economic meltdown and deliberate infractions by operators which eroded the capitalisation to about N5.4 trillion or $36 billion in the fourth quarter of 2009.
Yusuf who gave the hint in a chat with BusinessDay and select Legislative Correspondents in Abuja, assured that credible Committee has been set up to ensure implementation of the 10-year Master Plan for the capital market.
“I’m trying not to delve into some of the issue regarding what the committee is doing on this matter. We will be looking at the issue of private placement. One of the things that obtains in the world, in fact the American parliament which is one of the democracies that we copy, is seen as one fierce policeman with an eagle eye that can see what goes on on the Wall Street.
“Because naturally, human beings love to circumvent laws. It’s the fear of being caught and the consequences that bars people. I assure you by His grace that under my watch, we will go into that. For those who took those monies and assume it’s eldorado, it’s too bad. We are coming after you.
“In a few days we will come out with private bond placement. What is required is to have the confidence of our investors back. Unfortunately, at the early days of this government, there was a policy somersault when the government came out with the idea, I don’t know who gave them those advice of no forex transaction for about three, four months,” he lamented.
Yusuf who expressed optimism in the resuscitation of the capital market, he unveiled plans to float special fund to mitigate the effects of any slide in the stock market.
“To answer part of what you asked about investors confidence, there’s a fund now that’s being created to serves at least as a form of shock absorber to investors. So if anybody goes to the market now and gets his hand burnt, there’s a fund made available to at least make sure you don’t lose your whole investment.
“All these came about as a result of having reviewed what happened in 2008 so that we don’t fall into the same pit again. We are at least for now the first in Africa to have such. It’s a fund to cover some aspect of losses, just like we have in NDIC where those who put money in the banks can have their deposit back even it’s not all.
“So there’s a fund now that when you invest in the capital market and you have a challenge that’s verifiable, you would be paid some part of your investment so that you don’t lose the totality of your investment, so as to secure and give you confidence that yes, I got my back covered,” Yusuf said.
He also assured investors of the Committee’s resolve to provide effective oversight on the activities of the regulatory agencies and the operators with the view to ensure strict compliance with extant regulations.
“If you follow financial reports of recent, you would realise that there have been improvements in the capital market. There’s no nation anywhere in the world that attained sustainable height of development without a viable capital market.
“No nation depends on commodities such as oil and gas and what have you. You must take money from the capital market for investment and not a platform where it can be misappropriated. It helps corporate governance, it helps monitoring. So the Nigerian capital market can be said to be under construction and there’s calm in the capital market and we have master plan implementation committee, a 10-year master plan so that fortunately, men of honour and integrity would drive it.
“In recent time, we’ve entered into agreements with DMO, and other relevant bodies to be able to issue security bonds. This is the outcome of our capital market two days stakeholders forum. The forum came to identify that the drive which we had before now was too superficial. It was a reactionary drive, banks have so much money after recapitalization, so banks were the ones driving the boom in the capital market; it was pseudo, it was not real, it was not deepened.
“So what are having now is re-laying the blocks in perspective and making sure we have a viable capital market. The structures were dwindling, and the House committee on capital market has come out with a robust procedure to begin to oversight those who are saddled with the responsibilities of making rules for the capital market.
“It’s simple! You are not a Nigerian, you invest in Nigeria, and you are told no forex transaction, is your investment secured? The first thing you think of as an investor is not profit. It’s how to get your money back. That your investment, if you now get profit, fine, but can I get what I’ve put in there first?”
In the bid to restore the integrity of the market, Yusuf urged Federal Government to avoid initiating any policy capable of causing ripples and tension in the system, stressing that “the consequence of a policy somersault of just four months can last more than six years.”
“So in the capital market as at where we are, portfolio investors constitute the major drivers of our capital market and when that policy was introduced, they all withdrew their money. So what we are doing is begin to build their confidence back. It’s a process. However, what we are doing ultimately is for retail investors, you and I have to take over the capital market, not portfolio investors any more.
“Because we don’t those who have the chunk of money in the market to dictate what happens in our economy. So where we are now, that’s what we can manage, so the capital market is growing. There’s tremendous improvement, there’s better monitoring, there are things put in place to check the re-occurrence of what happened between 2008 and 2009,” he stated.
While responding to the challenges of unclaimed dividends, he explained that SEC is already working out modalities to ensure that “these monies actually paid back to the companies.
“They are held in trust, because they do not belong to the companies, they are people’s money. And we want to be sure that they are adequately and efficiently reinvested. Unfortunately where we became a bit handicapped as a committee was that a lot of these unclaimed dividends were dividends for shares bought within the period of capitalisation.
“When backs recapitalised, they had excess money, the advertised shares, they would call you, give you loan to buy their shares. So in an attempt to go beyond your capacity because there’s a limit to which you can buy, people now used fictitious names to buy these shares. Some used their children or relatives, and so the addresses changed over time and even the signatures used in signing the certificates couldn’t be remembered.
“So the truth of the matter is that a lot of these things cannot be claimed. But going forward, SEC has introduced e-dividends now. So you get it online straight,” he said.
