The Securities and Exchange Commission (SEC) has unveiled plans to enhance the regulatory framework governing borrowing by governments and corporate entities. This initiative aims to ensure sustainability and efficiency in the financial system, addressing key aspects of funding for economic development.
Speaking in a recent interview, the SEC’s Director-General, Dr. Emomotimi Agama, emphasized the critical role borrowing plays in driving growth across various sectors.
“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,” Dr. Agama stated.
He further highlighted the need for sustainable borrowing practices at all levels, particularly in light of the Supreme Court’s recent order mandating direct subventions to the 774 local government areas from the Federal Government. It therefore becomes important that we have in managing such resources via strategic and focused borrowing to help the developments in those sectors,” he added.
In a major development for corporate borrowing, The SEC DG announced significant changes to transform the capital market landscape. He highlighted the introduction of new rules on Central Counterparties (CCPs), which are set to take effect in 2025, as a key step in simplifying and streamlining borrowing processes for Nigerian companies.
“As a Commission, we have established those new rules, and they are going to be functional in 2025. We want to make borrowing a seamless and effortless process for Nigerian companies,” Dr. Agama stated.
He further emphasized the broader vision behind the initiative, pointing out the importance of fostering innovation and creating opportunities within the capital market. Agama highlighted the critical role of legal and regulatory frameworks in fostering trust within the derivatives trading market and establishing a stable, predictable environment for transactions.
He noted that the SEC’s framework aims to shield these transactions from general insolvency laws, ensuring a more secure platform for market participants. These efforts are expected to bolster Nigeria’s financial system, boost investor confidence, and contribute to the country’s broader economic growth. “It is very important that as we drive the growth of the Nigerian capital market, we also drive new products and new opportunities for every Nigerian,” he added.
The new regulations reflect the SEC’s commitment to improving corporate borrowing frameworks while promoting growth and innovation in Nigeria’s financial ecosystem. The SEC’s initiative is expected to address inefficiencies and enhance transparency in borrowing practices, enabling better allocation of resources to critical sectors. This move aligns with the Commission’s broader mandate to foster a resilient and inclusive financial ecosystem.
