SEC, government work out incentives for savings enhancement

Says decision will spur retail investors’ patronage
Worried about the low level of retail investors’ participation, the Securities and Exchange Commission (SEC), has disclosed that it is presently working with government on how to roll out new incentives to induce saving culture in Nigeria.

The Director General of the commission, Mounir Gwarzo, who noted that this would go a long way to attract more retail investors to the market, explained that the nation’s capital market can not record some reasonable level of investment, if incentives are not created to attract this segment of investors.

Citing Malaysia, South Africa and United States’ high retail investors’ contribution to the market, Gwarzo lamented that less than two per cent participation of the retail investors exists in the market.

“Our culture of savings is very low and the only way people can invest is when they save. Less than two percent of retail investors invest in Nigeria.

“ We are working to see the incentives that the government will roll out to encourage people to save.  Malaysia has nine per cent; United Kingdom 13 per cent; South Africa 19 per cent, and USA 43 per cent.

“We need to do a lot in educating people on financial literacy. We are collaborating with CBN and NICON to do a week financial literacy enlightenment,” he added.

According to him, one of the reasons the commission embarked on various initiatives such as the e-Dividend, Direct Cash Settlement, National Investors Protection Fund (NIPF), among others, was to attract retail investors to the market.

The SEC effort, he said, will see that in the next five to 10 years the level of involvement of the retail investors is raised to at least five per cent.

Speaking on the debt capital market, Gwarzo explained that the FMDQ Securities Exchange has done a lot on the platform to ensure that retail investors operate in that segment of the market.

“A lot of work is done to improve the debt capital market for retail investors. We will see more retail investors operating in debt market. We are working with FMDQ to set up guarantee institution for infrastructure bonds and SMEs so that they will have access to debt capital to make the market more robust and liquid. We would put the needed technology to allow retail investors raise fund and access debt capital.”

Also, the SEC boss said the commission had identified some of the challenges hindering foreign investors from accessing the market, saying it would partner CBN to ensure that banks provide entries for their foreign exchange (forex) allocation.

“One major challenge of foreign participation is forex allocation by banks. We would ensure that banks come up with entries for allocating forex. CBN will discuss with various banks to come up with this formular.