The Director General, Securities and Exchange Commission (SEC), Mr. Munir Gwarzo on Tuesday urged the federal government to encourage multinational companies operating in the country to list on the floor of the Nigerian Stock Exchange (NSE) to give Nigerians opportunity to benefit from their investments.
Speaking in Abuja while receiving members of the House of Representatives Committee on Capital Market, Gwarzo also lamented that what it currently generates from the market operations could not cover 50 percent of its cost, partly as a result of the downturn in the market.
He said: “There is a need for the government to encourage them (companies) there are so many options on how to get there. Some of us are of the opinion that you can use certain incentives, for instance I personally think you can use certain incentives to say that if government is to award a contract, unless a company is listed, other than that that company will not enjoy that contract.”
He said: “If Julius Berger and Setraco are bidding for construction work, Julius Berger should have an advantage because whatever income Julius Berger makes, Nigerian shareholders will also benefit. On the very low level, you can say if government is doing an evaluation of the companies that they will be giving contract, the company that is listed will get a higher percentage, 5-20%. SEC is very keen for companies to be listed, the more listed companies, the deeper the market.”
The SEC boss further expressed concern that the Treasury Single Account (TSA) operation had greatly reduced the capital market regulator’s ability to be flexible.
He said the commission was currently “running a very tight budget, given that the market has gone down and given that there are aspirations to move the market up we have to set aside some amount of money.”
According to him: “The budget of 2015, we had projection of N6.9 billion as our income but we were only able to make N4.9 billion because of the state of the market. We no longer take our staff on overseas and local training and our earning are now 30-40% less than we had in the past.”
However, he stated that the commission was working to attract more retail investors into the Nigerian capital market to deepen and develop the market.
Furthermore, he said: “As a country we have only less than 2% participation of retail investors in our market. Malaysia has 9%, South Africa 19%, USA 43%, and UK 13%. So our market is less being participated by the retail investors.
Due to the dominance of the foreign investors, anytime they move out of the market the market goes down. Our effort is to see that in the next 5-10 years we raise the level of involvement of the retail investor to at least 5%.”