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The Securities and Exchange Commission (SEC) has reaffirmed its commitment to strengthening the regulatory framework for borrowing by governments and corporations in Nigeria. This initiative aims to ensure sustainable financial practices and foster economic development.
Addressing Government Borrowing Practices
Dr. Emomotimi Agama, Director General of SEC, highlighted the importance of enhancing the borrowing framework during a recent interview. He noted that borrowing plays a vital role in the financial ecosystem and emphasized the need for sustainable practices, particularly in government borrowing at federal, state, and municipal levels.
“Improving the framework for borrowing is essential because it is integral to the financial system. Adequate funding is necessary for achieving developmental goals. With the Supreme Court’s recent order mandating direct subvention to the 774 local government areas, strategic and focused borrowing will be crucial for resource management and sectoral growth,” Agama explained.
Supporting Corporate Borrowing and Innovation
On the corporate front, the SEC DG revealed that the Commission is transforming the borrowing landscape with the introduction of new rules on central Counterparties (CCPs). These rules are designed to facilitate capital raising and ensure seamless borrowing processes for Nigerian companies.
“As a Commission, we have established new CCP rules, which will take effect in 2025. These regulations aim to simplify borrowing for Nigerian corporates and foster the growth of the capital market. By driving innovation, we are working to diversify Nigeria’s historically mono-product market,” he said.
Dr. Agama also emphasized the introduction of derivatives into the capital market as part of SEC’s efforts to expand financial products and opportunities. He underscored the importance of robust laws and regulations in supporting derivatives trading and building market confidence.
“To bolster confidence in derivatives trading, we aim to exempt these transactions from general insolvency laws, ensuring a safer and more predictable trading environment. This move is critical for creating a thriving derivatives market,” he added.
Building a Safer and Inclusive Capital Market
The SEC is focused on creating a secure and transparent trading environment to attract more participants and build investor confidence. By establishing enabling regulations and laws, the Commission seeks to position the Nigerian capital market as a hub for innovation and sustainable growth.
As Nigeria advances toward 2025, the SEC’s initiatives promise to reshape the financial landscape, providing robust frameworks that support borrowing, foster innovation, and drive economic development.
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