The Securities and Exchange Commission has revealed its plans to enhance the regulatory framework surrounding borrowing by both government and corporate entities, with a strong focus on maintaining financial sustainability in critical sectors.
This initiative follows a recent Supreme Court ruling that mandates the Federal Government to directly allocate subventions to all 774 local government areas.
In a statement shared with The PUNCH on Wednesday, SEC Director-General Emomotimi Agama underscored the crucial role borrowing plays in the financial system and the economy at large.
He stated, “Improving the framework for borrowing is very important because borrowing is part of the financial system, and we can only make much of the move we want to make if there is enough funding.”
Agama further noted, “Hence, we want to be sure of sustainability in both government borrowing and municipal and state governments, particularly with the new Supreme Court order regarding the 774 Local Government Areas receiving direct subvention from the Federal Government.”
He also stressed that the SEC’s primary focus is ensuring the sustainability of government borrowing, particularly for municipal and state governments, in light of the recent Supreme Court decision.
“Improving the framework for borrowing is crucial because borrowing plays an integral role in the financial system. We can only achieve our goals if there is enough funding, so it is essential to ensure sustainable borrowing practices,” Agama said.
Agama also highlighted the importance of strategically managing resources to support local government development projects.
On the corporate side, the SEC is preparing to introduce new regulations for Central Counterparties, which will streamline the borrowing process and allow Nigerian businesses to raise capital more efficiently. These regulations are set to take effect later this year.
“As a Commission, we have established these new rules, which will be functional in 2025. Our goal is to make borrowing a seamless and efficient process for Nigerian companies,” Agama announced.
Additionally, the SEC plans to diversify the Nigerian capital market by introducing derivatives, creating fresh opportunities for investors.
Agama emphasized that these changes will be backed by laws and regulations aimed at boosting market confidence and ensuring a secure and predictable trading environment.
To further encourage market growth, the SEC intends to provide exemptions for derivatives transactions from general insolvency laws.
Agama reaffirmed the Commission’s dedication to protecting investors and fostering a dynamic capital market in Nigeria.
As reported by The PUNCH, the SEC remains committed to safeguarding investor interests and fortifying Nigeria’s capital market.
