By Aduragbemi Omiyale
The need to develop a liquid government bond market has been emphasized by the Securities and Exchange Commission (SEC).
SEC Director-General Mr. Lamido Yuguda stated in a speech at the 2022 Capital Market Correspondents Association of Nigeria (CAMCAN) conference that this would have a positive impact on the economy.
Mr. Yuguda, represented by the agency’s Executive Commissioner of Operations, Mr. Dayo Obisan, stated that a liquid government bond market means there is an adequate supply of government bonds across a range of maturities, which is important for the construction of the benchmark of Crucial is the yield curve (important for setting the market-based risk-free rate used in stock valuation).
He further explained that the synergistic relationship between government bond and stock markets has been observed in several East Asian economies, which have seen increases in private investment and stock market capitalization after the establishment of a liquid debt market.
“At the same time, an increase in debt-fueled government spending crowds out private investment, which in turn is detrimental to overall spending and consequently to economic growth, affecting capital markets.
“In addition, an underdeveloped capital market negatively impacts institutional investors and limits the amount and maturity of funding available to the local government,” the DG said in the program titled Nigeria’s Public Debt and Capital Market.
At the event, held in Lagos over the weekend, Mr. Yuguda explained that the SEC, as the capital market’s apex regulator, is committed to creating a conducive and facilitating oversight and regulatory framework that supports the deepening and development of the Nigerian capital market.
“As you know, Minister of Finance, Budget and National Planning Ms. Zainab Ahmed has launched and presented the revised Nigerian Capital Markets Master Plan 2021-2025.
“The updated master plan underscores the Commission’s commitment to deepening and repositioning the financial market as the central anchor of our economy.
“The master plan, which represents the collective aspirations of the capital markets community, is focused on driving forward initiatives aimed at growing and deepening the market, with the ultimate goal of lifting our country into the top 20 global economies by year 2025,” he explained.
He announced that the capital market is more resilient and on a steady growth trajectory, adding that capital market correspondents have contributed to the development of the market, and expressed delight in their partnership with the agency in this noble task of developing and deepening the capital market .
According to him, reporters have taken on an increasingly important role in sharing with the public some of the Commission’s initiatives to develop the market, noting that the SEC is committed to supporting efforts aimed at filling financial literacy and gaps in close to society.
“I have no doubt that the capital market provides a good platform to address many of Nigeria’s economic challenges.
“For our part as regulators, we will continue to introduce new ideas and policies to develop and regulate a dynamic, fair, transparent and efficient capital market to contribute to the economic development of the country.
“We will continue to fulfill its mandate to protect investors and create an enabling environment for market participants.
“Policymakers and practitioners alike are interested in understanding the complex connection between the sovereign debt market and the Nigerian capital market,” he added.
In her remarks, CAMCAN Chair Ms. Chinyere Joel-Nwokeoma said the annual workshop is part of the association’s contributions to the development and growth of the national economy by bringing together regulators, operators and company executives to discuss economic issues , which affect the economy market in particular and the economy in general.
She said the topic was chosen due to concerns from various quarters about the nation’s soaring total debt stock, which stood at N42.80 trillion as of June 2022.
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