SEC: As Uduk Lives the Buhari Vision

By Femi Akinlolu

 One major blight of capital markets across the globe is a tendency towards opacity, an inclination to work the books just to appear healthy and bullish. The Nigerian capital market is not immune to such tendency, historically. This is why not a few have continued to applaud the appointment of Ms. Mary Uduk as the Acting Director General of the Securities and Exchange Commission(SEC) the regulator of the nation’s capital market.

Minister of Finance Mrs. Kemi Adeosun has shown sufficient courage   to debug the system and get it on the path of transparency, which fits into the vision and value system of President Muhammadu Buhari. The minister has had to contend with the bogey of graft and underhand dealings within the capital market circuit.

Given the role of the capital market as the barometer with which investors and entrepreneurs measure the health, short term and long term, of any economy, it stands to reason that if the Buhari government must make good its promise to grow the economy, create job and create wealth, it must arrest the hemorrhage in the sector and curb excesses of the regulator and operators which often are driven by personal and parochial sentiments rather than public interest. This is the context in which the appointment of Uduk by the minister is viewed as the perfect elixir to stem the rot in the capital market.

The minister had explained that Uduk’s appointment in April was governed by the provisions of the Investments and Securities Act (ISA), 2007 and the conditions of service applicable to the Director-General of the Commission.

In the letter dated April 13, 2018, Adeosun explained that Uduk’s appointment was necessitated by the need to ensure effective regulation of the capital market. The minister said the appointment would, subject to satisfactory performance, subsist until further notice.

The minister subsequently announced the redeployment of the former acting Director-General, Dr Abdul Zubair, to External Relations Department. There were other reassignments approved by the minister including: Reginald Karawusa (Acting Executive Commissioner, Legal and Enforcement), Isiyaku Tilde (Acting Executive Commissioner, Operations), and Henry Adekunle (Acting Executive Commissioner, Corporate Services).

So far, Uduk has demonstrated a good grasp of what “effective regulation” of the capital market entails. By word and deeds, she has inclined herself on the same plane with the values of President Buhari to engender a culture of transparency in the system. She is treading  the path of openness and zero corruption.

She believes that investors’ confidence is key to ensuring that Nigeria makes the most of the rich potential in her capital market, arguably one of the most dynamic in Africa. This also is in tandem with the mission of SEC which is “to develop and regulate a capital market that is dynamic, fair, transparent and efficient, to contribute to the nation’s economic development”.

Regulating the capital market of Africa’s largest economy does not come cheap. It comes with its peculiar challenges and throws up even more spikes on its path. Cases of insider dealings, outright stealing and various criminal acts all fuelled by greed and negligence among some of the operators are rife. All of this should engage the attention of Uduk as she steels herself to right the many wrongs that dogged the tenure of her predecessors. So far, the received opinion is that she has shown the capacity to undertake a major transformation of the market and sustain it.

Capital market watchers who have been disappointed in the past by the messy turn of events have said that her appointment was well deserved. She has been inside the system having joined SEC in 1986 as an assistant financial analyst. Ever since, her career as a regulator has spanned many portfolios and departments within the Commission. She has had experience in corporate finance, administration and in providing structural, policy and due diligence for capital market transactions.

In addition, she has been responsible for managing several landmark capital market projects including the registration of capital market operators(CMOs), articulating rules for bonds and equities; Mergers, acquisitions and takeovers, and managing the banking and insurance industry consolidations between 2005-2007.

She also served as the pioneer Head of the Operations Division in the Lagos Zonal Office, and has headed a number of departments in the commission which include Internal Control, Investment Management, Financial Standards and Corporate Governance and Securities, and Investment Services Department, among others.

She thus comes to her new station not as a rookie but as a rounded and primed staff. Her cross-departments experience gives her a head-start in a sector where being brilliant and intelligent is not enough, you need to also get smart, be knowledgeable and have the capacity to always read the prompts on the dashboard ahead of others. This is where her appointment makes much sense. A regulator must avoid the din and must never be a victim of follow-the-crowd syndrome.

The banana peeling that became the Achilles heels of some of her predecessors was that they could not put down the marker to separate the regulator from the operators. Often, the regulator for some strange reasons mostly bordering on graft becomes subsumed under the influence of the operators, something akin to the referee becoming a player. It gives room for corruption, manipulation and pervasive swindle of the investing publics.

Many believe Uduk’s leadership style, her career path and temperament lend her to easily navigate the banana peeling.  SEC is driven by values namely: leadership by example, transparency, discipline,  honesty,  effectiveness, commitment to excellence,  punctuality, fairness and proactiveness. Over the years, she has come to embody these values without attracting undue attention to herself.

The commission’s duties are critical to reflating the economy, sustaining growth and promoting healthy competition. It does this through registration, inspection, surveillance, investigation, enforcement and rule-making. Each of these duties has a direct nexus with the others such that if the commission fails in one, it triggers a backlash on the entire system. Uduk knows this too well being a SEC insider for many decades. Getting all of these responsibilities right has been the challenge of SEC leadership.

The issues of surveillance, inspection, investigation and enforcement, for instance, must never be taken lightly. This is at the core of various manipulations by shady operators. They cheat through the system and get away with it sometimes because the regulator looked away or slacked in its surveillance and inspection duties. The effect of this is a toll on investors’ confidence.

The Acting SEC DG is up to this. During a  chat with journalists after the commission’s Capital Market Committee (CMC) meeting in Lagos recently,  she left no one in doubt of her resolve and that of her new team to continue to bolster investors’ confidence in the market.

She said: “Members of the new management team have worked in the commission for many years with experiences in different departments of the commission and aspects of the capital market. We have always been part of the commission’s efforts at improving investors’ confidence and implementing the Capital Market Master Plan.

“The Master Plan will continue to be our working document and we shall continue to implement initiatives that will promote investors’ confidence such as E-Dividend registration, Direct Cash Settlement, Dematerialization, Complaint Management Framework, Financial Literacy and Investors’ Protection Fund, among others.”

Without a doubt, Nigeria has lost so much in investment because of capital market volatility. Some investors simply lost confidence in the system and walked away. The challenge is to bring them back and even more.

The new SEC leadership is showing much promise. They are following the template of President Buhari on transparency, integrity in service delivery and a commitment to deliver the vision of the founding technocrats of SEC which is “to be Africa’s leading capital market regulator”. They must resolve to make their moment count. The capital market seriously needs this breath of fresh air.

 .Akinlolu, a capital market and investment analyst writes from Abuja.