The Securities and Exchange Commission (SEC) said that from the perspective of capital market development, the development of a liquid government bond market would have a positive effect on the economy.
SEC Managing Director Mr. Lamido Yuguda said this at the annual conference of the Capital Market Correspondents Association of Nigeria on the theme: “Nigeria’s Government Debt and the Capital Market”. held over the weekend.
Mr. Yuguda explained that a liquid government bond market implies that there is sufficient supply of government bonds across a range of maturities, which, in turn, is critical to building the benchmark yield curve, “which is important for the establishment of the market”. -based on the risk-free interest rate used in the pricing of shares”.
Represented by SEC Executive Commissioner for Operations, Mr. Dayo Obisan, Yuguda said that this synergistic relationship between government bond and equity markets has been observed in several East Asian economies, which have experienced a large increase in private investment and market capitalization following the creation of a liquid debt securities market.
“At the same time, an increase in debt-financed public spending crowds out private investment, which in turn negatively affects overall spending and, therefore, economic growth with implications for the capital market.
“Furthermore, an underdeveloped capital market will negatively affect institutional investors, limiting the amount and duration of funding available to government locally,” he said.
Yuguda said that as the supreme capital market regulator, the SEC is committed to creating a supervisory and regulatory framework that enables and facilitates the deepening and development of the Nigerian capital market.
He said, “As you are aware, the Minister of Finance, Budget and National Planning, Mrs. (Dr) Zainab Shamsuna Ahmed has launched and unveiled the revised Nigerian Capital Market Master Plan 2021-2025;
“The updated Master Plan underlines the Commission’s commitment to deepening and repositioning the financial market as a key anchor of our economy.
“The blueprint, which represents the collective aspirations of the capital markets community, is focused on driving initiatives to grow and deepen the market with the ultimate goal of accelerating our country’s emergence into the top 20 world economies by 2025.”
He revealed that the capital market is more resilient and following a steady growth trajectory, adding that the capital market correspondents have contributed to the development of the market and welcomed their partnership with the Commission in this noble task of development and capital market deepening.
The SEC CEO said capital market correspondents have played an increasingly important role in communicating to the public some of the Commission’s initiatives to develop the market.
He assured that the SEC is committed to supporting efforts to close the financial literacy and empowerment gaps in our society. This commitment is expressed in the various financial inclusion and literacy initiatives undertaken by the Commission alone or in collaboration with other stakeholders. This workshop we are attending today is one of them.
“There is no doubt in my mind that the capital market presents a good platform to address many of Nigeria’s economic challenges. As regulators, we will continue to introduce new ideas and policies to develop and regulate a dynamic, fair, transparent and efficient capital market, in order to contribute to the economic development of the country.
“We will also continue to fulfill its mandate of protecting investors and creating an enabling environment for market operators.
“Policymakers and practitioners want to understand the complex nexus between the public debt market and the Nigerian capital market,” he added.
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