By Abubakar Yunusa
In today’s fast-paced economic landscape, the efficiency of capital markets plays a pivotal role in shaping national development. The Nigerian Securities and Exchange Commission (SEC) is leading a transformative wave by significantly reducing the time it takes for companies to raise capital and list their shares. This rapid enhancement in market efficiency not only stimulates economic growth but also fosters a more attractive investment environment.
One of the key benefits of reducing time to market—the duration from initial capital raising to stock exchange listing—is the boost it provides to market liquidity. By accelerating the listing process, companies can access necessary funds more swiftly, resulting in increased liquidity within the market.
This liquidity is essential for economic vitality, as it supports both the expansion of existing enterprises and the emergence of new ventures.
Moreover, swift capital access instills greater investor confidence. Efficient and transparent listing processes reassure investors of a market that is both trustworthy and dynamic, encouraging more substantial investments. As investor confidence grows, so does the competitive edge of the market, making it a more appealing venue for global investors and companies.
The SEC’s recent initiatives are reshaping Nigeria’s capital market landscape. The introduction of the electronic Public Offering (e-PO) system in 2019 is a prime example. This new rule automates the application process, significantly reducing manual paperwork and processing times. Such innovations are critical in making the market more efficient and accessible.
Further digital transformation is evident in the Commission’s move towards automation. By digitising document submissions and approvals, the SEC minimises delays associated with traditional methods, fostering a more transparent and streamlined process. This digitisation is complemented by regulatory reforms designed to simplify and expedite approval processes, such as the adoption of international best practices and a revised checklist review for fixed income securities.
In June 2024, the SEC unveiled a framework for the banking sector’s recapitalisation programme, establishing clear guidelines for capital raising during periods of financial restructuring. This framework includes a mandatory e-offering platform, which enhances efficiency, transparency, and integrity throughout the capital raising process. Such measures not only streamline operations but also mitigate common issues like unclaimed dividends.
The SEC’s commitment to fostering a knowledgeable market ecosystem is evident in its capacity-building efforts. Targeted bi-annual training for issuing houses and the development of real-time surveillance tools highlight the SEC’s proactive approach to ensuring market participants are well-equipped and regulatory compliance is maintained.
The SEC has also enhanced its operational practices by ensuring all applications are processed online and fostering collaboration with other regulatory agencies. The move towards virtual registration interviews and the availability of regulatory information online further reflect a modernised, accessible regulatory environment.
These efforts collectively demonstrate a robust strategy to reduce time to market, thus boosting the capital market’s role in national development. By facilitating faster capital access and creating a more investor-friendly environment, Nigeria is poised to experience a surge in economic growth and competitiveness on the global stage.
Recently, the Director General of the Securities and Exchange Commission, Dr. Emomotimi Agama in an interview, stated that the Commission has implemented various initiatives to reduce time to market with the aim of improving the efficiency and attractiveness of the Nigerian capital market, promoting economic growth and development.
Shorter time to market will also enhance investor confidence because when the listing processes are efficient, it can increase investor trust and confidence in the market. A shorter time to market can make a jurisdiction more attractive to companies and investors, promoting competition and growth.
The commission has been actively digitising its operations, including the submission and processing of applications for securities registration, to reduce delays caused by manual processes.
This involved the use of electronic platforms for document submissions and approvals, which not only speeds up the process but also improves transparency.
“We have undertaken regulatory reforms aimed at simplifying and streamlining the approval processes,” Agama said.
“These reforms include updating rules and regulations to reflect current market realities and adopting international best practices that enhance efficiency. For instance, the Commission introduced checklist review for registration of fixed income securities, thereby shortening the review and approval timelines. The Commission launched and conducted a targeted bi-annual training for Issuing Houses to enhance time to market and fast-track review of applications.”
Agama further disclosed that in June 2024, the Commission issued a framework on the banking sector recapitalisation programme, which outlines the guidelines and procedures banks are required to follow to raise capital during the recapitalisation period to ensure a smooth, transparent, and efficient capital raising process.
This framework serves as a comprehensive guide for Banks/Holding Companies and market participants on the Commission’s requirements for capital raising and mergers and acquisitions, as well as assisting participants in navigating the recapitalisation programme effectively to ensure proper and timely review and approval of transactions.
He said, “The major highlight of the framework is the requirement for an e-offering platform to be provided by a Securities Exchange for the capital raising exercise, which allows for end-to-end offering, subscription, and payment process.”
