SEC Moves to Strengthen Monitoring of Bond Proceeds Usage

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Goddy Egene
There are strong indications that the Securities and Exchange Commission (SEC) will introduce a new strategy for reporting of the usage of proceeds of bonds raised from the nation’s capital market.

This new strategy, it was gather, will lead to better assessment and verification of judicious use of such funds. While the capital market has been a source of capital raising, especially through bonds by federal, state governments and other corporate organisations, there have been allegations of diversion of some of those funds to other usage.

This development is having a negative impact on investor confidence in the market. Although SEC has a mechanism for monitoring the usage of such bond proceeds, THISDAY checks showed the capital market apex regulator is working on improving the monitoring and reporting method.

According to sources close to the commission, a new reporting template may be introduced that will include more disclosure, which will enable those tasked with the monitoring process perform better.

“Given the experience of the past where some state governments have been accused of diversion of bond proceeds, SEC is moving to reform and strengthen the monitory and reporting process. This is part of efforts to deepen the market and sustain investor confidence,” a source said.
Only recently, the federal government raised N100 billion via Sukuk that is tied to various road projects across the country. Lagos State has been a regular user of the capital market to raise bonds to fund infrastructure development.

Also, the Ogun State Governor, Ibikunle Amosu recently visited the Nigerian Stock Exchange (NSE) and indicated the interest to access the market soon.
Speaking to journalists at the closing Gong ceremony on the Lagos floor of the NSE recently, Amosun explained that he was at the exchange to explore opportunities in the market.

“The capital market isn’t a place where you just jump into, you need to prepare and I want to believe we can do better. There are some responsibilities that come with borrowing money. So when you are in a position to not fulfill those obligations then there is crisis. When we came in, we were doing N700 million monthly, we could not come here with that but now we are doing about N6- N7 billion so we can relatively come to the capital market and say this is who we are and what we have done, we are here for their support. If I come here to take money, I must pay it back. The crisis we find ourselves in today is that we are borrowing short and spending long, it is financial chaos and that is what is happening,” he said.

According to him, now is the time, people believe in his government, stressing, “ If you come here and they look at the numbers all those boxes would be ticked straight in our favour. If I came here years back, nobody would have wanted to hear us out but we are here now and ready. Even though I have just a year to go, the governance of Ogun State is not going to end with me. But I think with where we are now, we can take advantage and the benefits of several offerings that the NSE has and that is why I am here.”