Market News

The Securities and Exchange Commission (SEC) has disclosed that banks raised N2.2 trillion from the capital market in 2024 to meet the Central Bank of Nigeria’s (CBN) new recapitalization requirements.

It would be recalled that in November 2024, the SEC announced that banks had raised N1.7 trillion from the capital market in their efforts to meet the CBN’s new minimum capital base demand.

This revelation was made by the SEC Director-General, Dr. Emomotimi Agama, who noted the critical role of the capital market in fostering economic growth. “For all of the issuance that happened in the market last year, we were able to raise more than N2 trillion, precisely about N2.2 trillion for the banks, which means the capital market is actually the element that helps to galvanize growth and development,” he said.

Dr. Agama stated that banks are vital to the nation’s economic development and recounted the skepticism that initially greeted the CBN’s recapitalization directive. “Last year, the Central Bank came up with a regulation to increase capital for all banks. Many people thought it was too daunting a task for the capital market. However, where else will the banks, who already loan money short term, get money from other than the capital market?”

The statement, issued in Abuja on Wednesday, also revealed other achievements of the capital market in 2024. According to the SEC, Collective Investment Schemes (CIS) in the country increased to over N3 trillion during the year.

Explaining the benefits of CIS, Dr. Agama stated that, “In the collective investment schemes, you get a bucket of shares and ask people to invest. If you are investing through a collective investment scheme, you are likely investing in ten companies via one route rather than directly in a single company.

This reduces risk, diversifies potential, and mitigates market volatility.”

He added that CIS offers an accessible investment option for Nigerians unfamiliar with market dynamics, as professionals manage funds on behalf of investors.

Beyond CIS, the SEC Director General stressed the critical role of the capital market in funding infrastructure development. “There is no economy that can grow without infrastructure, and the only place you can get long-term capital for infrastructural development is the capital market,” he said. He warned against relying on the money market for long-term projects, describing such practices as a “recipe for failure.”

To enhance efficiency, Dr. Agama outlined various reforms undertaken by the SEC, including reducing the approval timeline for capital market applications. “Time to market is now 14 days if all documents are in order. Previously, this process could take up to two years,” he said. He also highlighted the introduction of E-offering platforms, which allow Nigerians to make investments using mobile phones without visiting banks or other physical locations.

Dr. Agama expressed optimism about the potential impact of the Investments and Securities Bill 2024, currently awaiting presidential assent. He described the bill as a comprehensive framework for market regulation and development, positioning the capital market as a key driver of the nation’s economic growth.

“We believe strongly that once the process with the National Assembly is concluded, the President will give his assent. This bill is a vehicle for development for this nation, and we want to mainstream the capital market into national development,” he concluded.

The SEC’s initiatives and the capital market’s performance in 2024 underscore its pivotal role in economic transformation and its capacity to meet critical national financial needs.