The Securities and Exchange Commission has announced plans to strengthen its regulatory framework for borrowing by both government and corporate entities, with an emphasis on ensuring financial sustainability in key sectors.
This move comes amid the Supreme Court ruling mandating direct subventions from the federal government to all 774 local government areas.
In a statement made available to our correspondent on Wednesday, SEC Director-General Emomotimi Agama highlighted the importance of borrowing in the financial system and the broader economy.
He said, “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.
“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.”
Agama explained that the SEC aims to ensure sustainability in 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.
He emphasised the importance of managing resources strategically to support development projects at the local government level.
For corporate borrowers, the SEC is set to introduce new regulations on Central Counterparties, which will streamline the borrowing process and enable Nigerian companies to raise capital more effectively. These new rules are expected 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 stated.
The SEC also plans to diversify the Nigerian capital market by introducing derivatives, which would create new opportunities for investors.
Agama emphasised that these changes will be supported by laws and regulations designed to build confidence in the market and provide a safe and predictable trading environment.
To facilitate this, the SEC aims to provide exemptions for derivatives transactions from general insolvency laws, further encouraging market growth.
Agama reiterated the Commission’s commitment to safeguarding investors and ensuring a dynamic capital market in Nigeria.
The PUNCH reported that the Securities and Exchange Commission has reiterated its commitment to protecting investors and strengthening the Nigerian capital market.
