SEC now to approve issuance of securities on borrowing

Kemi Adeosun, minister of finance warned on Wednesday, in Abuja that henceforth, the Securities and Exchange Commission (SEC) would be solely responsible for the supervision, regulation and approval of issuance of securities in the local market for Nigeria’s internal debt as provided by the law.

The is part of a new offensive approach by the federal government on surveillance for local borrowings by the three tiers of government to forestall an obvious debt overhang.

Adeosun said however that SEC would only grant approvals subject to a satisfactory debt sustainability analysis and compliance with the Fiscal Responsibility Act 2007, the ISA and SEC Rules.

Nigeria’s total debt burden stands at over N16 trillion by June 2016 end, rising by over N4 trillion just in six months, according to figures from the Debt Management Office (DMO)

“The clarification became necessary in recognition of the need to engender proper management and coordination of Nigeria’s internal debt through issuance of securities in the local market and to promote better fiscal responsibility,” Adeosun said in a circular she personally signed.

Citing the Investment and Securities Act No. 29 of 2007(ISA) and the Rules and Regulations of the Securities and Exchange Commission made pursuant to the ISA (the SEC Rules), the minister said SEC “shall continue to have and discharge the sole responsibility for the supervision, regulation and approval of the issuance of such securities in the local market by Federal, Government Agencies, State and Local Governments, their Agencies and Corporations.

“Henceforth, all applications in relation to the issuance of such securities by any of the aforementioned entities shall be made to the SEC for review and approval,” she emphasised in the one page circular.

Adeosun added that in discharging its responsibility, SEC would collaborate with the Office of the Accountant-General of the Federation, the Federal Ministry of Finance and the Debt Management Office in carrying out a debt sustainability analysis.

This is to encourage fiscal responsibility by the various tiers of government, and thus promoting an efficient sustainable capital market which engenders investor confidence.

“The final approval for such securities issuance shall be granted to the relevant applicant government or agency by the Securities and Exchange Commission subject to a satisfactory debt sustainability analysis and compliance with the Fiscal Responsibility Act 2007, the ISA and SEC Rules,” Adeosun further stated.