Emefiele's big blooper

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If the Nigerian Exchange Group was a club, it would be the one where even the people with no social lives never want to be associated with. When the most exciting thing that has happened to Nigeria’s Stock exchange in the last decade is a name change, then, Houston, we’ve got a problem. Here’s what I wrote about the Nigerian Exchange Group (NGX) a few weeks ago:

“Initial Public Offerings (IPO), which put the shares of exciting companies in the hands of individuals, are hard to come by in Nigeria. MTN Nigeria’s IPO was forced, BUA’s IPO was by a listing by introduction and GSPECPLC generated very little excitement. In contrast, there were 1058 IPOs in the US last year, compared to Nigeria which has had no IPOs since MTN Nigeria’s in 2019.”

The NGX is aware of the problem and in 2020, they did a lot of talking about convincing tech companies to list on the exchange. Panel sessions were held, proposals were made and articles were written, but actions speak louder than words. While all of that was going on, the Securities and Exchange Commission (SEC), whose job it is to maintain fair, orderly and efficient markets, had another move up its sleeve.

In July 2021, the SEC proposed an increase in the registration fees for issuing houses, underwriters and fund managers. With the proposed amendment, brokers/dealers would pay N5 five million, from N500,000 as registration fee. A broker/dealer was expected to pay N100,000 each as processing fees and registration of sponsored individuals in the new rule.

The fee for Sub-brokers (digital) was increased to N1 million from N200,000; sub-brokers (corporate) to N1 million from N200,000 and inter-dealer brokers to N5 million from the current N500,000. The fees for issuing houses, underwriters and fund managers were also reviewed upward from the current N500,000 to N10 million.

The pushback against the proposal was instant and understandable. The Guardian quotes a capital market operator as saying: “Any agent of the government that is making such a proposal at this time is not helping the market and the people. It is unfortunate that at a time when governments in other countries are supporting operators with various relief materials and intervention measures, ours is increasing fees to the detriment of the market.

“Why are we always making things difficult for the capital market stakeholders?”

While the proposed amendments in July appear to have been shelved at the time, Notadeepdive can exclusively report that the SEC will go ahead with the increases. In an SEC document I saw on Friday dated December 20, 2021, the amendments appear to have been signed and implementation of the new fees will reportedly start soon.

It’s only fitting to end with this question from Boniface Okezie: “I do not know where the SEC wants them to get this money from; is it from the market that has been on a downtrend in the past few years?”

While you think about that knotty question, let’s talk about our man of the year, Godwin Emefiele.

Emefiele’s big blooper

It’s been a super busy weekend for Godwin Emefiele. The CBN governor, who has made great strides in his management of the economy is now being pressured to run for President by ‘The Green Alliance.’ It’s difficult to argue against Emefiele’s candidacy. His Anchor Borrowers Programme has, in collaboration with the border closure policy, sent the price of a bag of rice from N9,000 to N33,000.

Under his watch, food inflation has hit 17% while headline inflation is firmly in double digits. His tenure as CBN governor has also been synonymous with an unstable FX policy regime and illegal borrowing to the FG through Ways and Means advances. To call his tenure a shitshow will be the height of kindness.

Yet, Emefiele’s Presidential run isn’t the only thing that caught my eye this week. He kicked off the weekend by announcing that the CBN would stop the sale of dollars to banks by the end of the year. Per his statement, “The era is coming to an end when, because your customers need $100 million in foreign exchange or $200 million, you now want to pack all the dollars and pass it to CBN to give you dollars, “It is coming to an end before or by the end of this year. We will tell them don’t come to the Central Bank for foreign exchange again go and generate their export proceeds.”

If his statement and timeline were true, it would be the cherry on top of the retinue of strange FX policies the CBN has pursued since 2015. Thankfully, the CBN stepped up to clarify Emefiele’s statement, in one of the rare reminders that it is an important institution.

Here’s an excerpt of a statement from the CBN: “The CBN is an institution and does not make policy based on verbal responses to a question. The Governor was only responding to a question and was painting a hypothetical scenario. So, there are no plans to stop the sale of forex to banks this year.”

Since the CBN isn’t doing anything drastic, we’ll be saved the need to analyse why halting the sale of FX to banks (with BDC’s also shut out of the system) is a bad idea, but feel free to go at it in the comments section. See you on Friday!