Business
National Assembly Introduces Jail Terms For Ponzi Scheme Promoters
The Investment and Securities Bill, which might result in jail time for people who advocate Ponzi schemes in Nigeria has been passed by the National Assembly.
The Investment and Securities Service Bill 2023 finally scaled through the final hurdle of the National Assembly when the Senate passed it on March 29.
The bill, which is expected to aid the functioning of the capital market and facilitate the ongoing economic diversification in the country, had been passed by the House of Representatives in December. It is only awaiting presidential assent to become law.
At the plenary, the Senate President, Ahmad Lawan, stated that the bill is expected to protect investors, adequately regulate the market, reduce systemic risks as well as provide for more stringent punishment for operators of Ponzi schemes.
He said, “The bill for an act to repeal the Investments and Securities Act 2007 Act No. 29 2007 and enact the Investments and Securities Bill 2023 to service the SEC as the apex regulatory authority for the Nigerian capital market as well as regulation of the market to ensure capital formation, to protect investors, maintain fair, efficient and transparent market and reduction of systemic risk and for related matters is hereby passed.”
Speaking as of the time the House of Representatives passed the bill, the Chairman of the House Committee on Capital Markets and Institutions, Babangida Ibrahim, stated that the ISB 2023 was capable of transforming the capital market, attracting foreign investors as well as boosting investors’ confidence, among others.
Ibrahim said, “The bill seeks to repeal the existing Investments and Securities Act 2007 and to establish a new market infrastructure and wide-ranging system of regulation of investments and securities businesses in Nigeria, especially in the areas of derivatives, systematic risk management, financial market infrastructure and Ponzi scheme and platforms.”
One of the developments that the new bill brings is the prohibition of Ponzi/Pyramid schemes, which have led to the loss of billions of naira on the part of victims and also affected confidence in the investment climate in Nigeria.
The passed bill prohibits Ponzi/pyramid schemes as well as other illegal investment schemes and prescribes a jail term of not less than 10 years for promoters of such schemes.
Ponzi schemes, also known as pyramid sales schemes, are a money laundering system where investors are lured in with the promise of high returns on investment after a specified period.
The system runs in a somewhat cyclic fashion by paying old investors with deposits of new investors. Usually, this cycle becomes unsustainable when the backlog of old investors eligible for payments exceeds the investments coming into the system.
According to Nigeria’s Securities and Exchange Commission, three million Nigerians lost N18bn when the popular Ponzi scheme, Mavrodi Mundial Movement aka MMM, crashed in 2016. As of 2022, Nigerians have lost over N300bn in Ponzi schemes in five years, according to a report generated by the Norrenberger Financial Investments scheme.
The promoters of a popular investment scheme, Ovaioza Farm Produce Storage Business Limited, are facing prosecution for luring members of the public to an unregistered collective investment scheme. The promoters, Imu Yunusa and Goodness Omeiza have been accused of defrauding their victims up to N2bn.
Reacting to the introduction of the prohibition of Ponzi schemes, Chief Executive Officer of Enterprise Stockbrokers, Mr Rotimi Fakayejo, said that the move was long overdue and a welcome idea.
He said, “I remember very well, this Ponzi scheme that got a lot of people in trouble, MMM. In the end, it is not just about people losing money. It is the disinterestedness in investing. First, they invested in the wrong window and ultimately, they will not invest again.
“Some foolishly and gullibly invested in it and some because of ignorance entered into it and others because of greed. Those who entered into it because of greed know what they were doing, they are just greedy. But the ones who get into it ignorantly, not knowing that such schemes are not authorised by the SEC are the ones who may never enter into any viable or regulated investment window again. Every economy needs investment, for money to be revolving through profitable channels.”
Fakayejo also argued that both those who get involved in Ponzi schemes and their promoters should be punished, albeit, the sanctions would be different.
He said, “The person who goes into it should get a small punishment and the person that starts the scheme should get a huge penalty. For anything, you are supposed to make findings.”
Regarding the proposed jail term of not less than 10 years, Fakayejo stated that the inclusion of asset forfeiture and also a fine of 10-20 per cent of the amount of money collected from victims may not be a bad idea.
Expressing a divergent opinion on the Ponzi scheme prohibition, the National Chairman of the Progressives Shareholders Association of Nigeria, Boniface Okezie, stated that Ponzi schemes have been embraced in other places.
“The Ponzi scheme has worked elsewhere; people have embraced it but the Nigerian market has not embraced it and SEC said that it is not known to them and that it is a scam and so they cannot allow Nigerians to patronize it.”
Okezie also accused the National Assembly of copying foreign laws that may have little or no impact on the Nigerian scene and doubted that the President, Major General Muhammadu Buhari (retd) would sign the bill before the expiration of his tenure next month.
The PSAN boss said, “I do not think the outgoing president will assent to that bill before he leaves office on May 29 because previous bills sent to him, it took him time to assent, not to talk of now that he is going for retirement.”
Speaking on some highlights of the bill in a statement released after the Senate passed the bill, the Director-General of the Securities and Exchange Commission, Lamido Yuguda, said that a recommendation was made in the bill for the inclusion of the National Pension Commission on the SEC board for increased collaboration between the two agencies, particularly to encourage greater investment of pension funds and in capital market products/instruments.
This is a welcome development, according to stakeholders, given the visible role that pension funds play in the capital market already.
Capital market operator, Fakayejo, said that Pencom having a seat on the board of SEC was long overdue.
He said, “The pension funds have been a major investor in the capital market. Look at all the major instruments, either bonds or equities, commercial papers, at the different classes of bonds, whichever way you want to look at it, the pension funds are the largest investors. So, I believe they should have a say in how the market is being regulated.”
Okezie also agreed, saying that the pension funds had been a major player in the capital market.
He said, “The Pension Fund has contributed to a large extent to what are seeing today of the rallying in the capital market. If they are investing in the SEC-regulated market, they should be mindful of where they invest their money so that their money does not get trapped when they need to pay those retirees.”
Commenting on the bill being able to boost investors’ confidence and attract foreign investments like the Chairman of the House Committee on Capital Markets and Institutions, had boasted, Fakayejo, pointed out that the reasons foreign investors left and are leaving are still very much around.
He said the unstable exchange rate was a major deterrent for foreign investors.
“I don’t see anything in the bill that is a plus for foreign portfolio investment. You and I know that the reason they are not here or why they have taken away their money is the instability of the naira. That has been the basic reason they (FPIs) are not here.”
Professor Olawale Ajai of the Lagos Business School also agreed that the country’s business environment has not been investment-friendly.
Ajai said, “Insecurity and the opaque naira foreign exchange regime have not helped in recent times, in spite of strenuous efforts on ‘doing business reforms.’”
Others highlights of the bill include the expansion of the categories of issuers as a key step towards the introduction of innovations and offerings such as crowd-funding as well as the facilitation of “commercial and investment business activities”, subject to the approval of the commission and other stipulated controls.
The bill also expands the definition of a Collective Investment Scheme to include schemes offered privately to qualified investors, and contains an entirely new part which regulates Commodity Exchanges and Warehouse Receipts.
The SEC DG said that the new parts of the bill “are essential for developing the entire gamut of the Commodities ecosystem”.
According to him, a new part on the management of systemic risk has been introduced, covering the following themes: monitoring, management and mitigation of systemic risk in the Nigerian capital market; arrangements with other regulators relating to information required from entities that are regulated by other regulators; sharing of information between financial sector regulatory authorities or government agencies; and use of a legal entity identifier to provide for proper monitoring of systemic risks.
The proposed legislation categorizes Securities Exchanges as either composite or non-composite exchanges. A composite exchange allows for the listing and trading of all types of securities and products, whereas a non-composite exchange specializes in a single type of security or product.
Additionally, the bill expands the responsibilities of exchanges and outlines clear guidelines for revoking registration. It also introduces new provisions regarding Financial Market Infrastructures, such as Central Counter Parties, Clearing Houses, and Trade Depositories.
President of the Pan-African Conglomerate, Dangote Industries Limited (DIL), Aliko Dangote has called for increased investments in the African continent to foster its rapid growth and development.
He made the call at the largest gathering of private sector leaders in Africa, the Africa CEO Forum in Kigali, Rwanda.
According to Dangote, recent trends underscore Africa’s pivotal role as the future epicenter of global progress.
The business mogul cautioned against the continent’s overreliance on raw material exports, but advocating instead for strategic investments that will propel indigenous industries. He urged African nations to resist the urge to export raw materials but to nurture domestic manufacturing capabilities so as to reduce dependency on imported consumer goods.
He said, “Looking ahead, Africa holds the key to its greatness. I’m not merely investing money but dedicating my entire being to this cause. In Africa, possibilities are boundless. It is like a scratch card; you won’t know what is inside unless you scratch it.
“For some of us, despite the boom of the capital market in the US, we didn’t really participate, rather we invested in Africa.”
Over the past seven years, Dangote pointed out that he had channelled over $25 billion into bolstering Africa’s self-sufficiency in vital sectors such as fertilizers, petrochemicals, and refined products.
Notably, he said the monumental Dangote Refinery, boasting a capacity of 650,000 barrels per day, stands poised to meet the burgeoning demand across West Africa, Central Africa, and South Africa.
“We have finished our refinery; it is quite big. We believe it is what Africa needs. If you look at the entire continent, there are only two countries that don’t import petroleum products, only Algeria and Libya but the rest import.
“We need to change that, so we don’t just produce raw materials but finished products and create jobs. One of the things we need to know as Africans is that when we produce raw material and export them while others dump finished products on our continent, what we are doing is that we are importing poverty while exporting jobs. We must change the narrative.
“We just commissioned in February. We are producing jet fuel and diesel. By next month, we will be producing gasoline but what that will do is that it will be able to take most of the African crudes that are being produced and be able to supply refined products not only in Nigeria because our capacity is too big for Nigeria.
“It will be able to supply in West Africa, Central Africa and South Africa. This is the first phase, we are going to the next phase by next year,” he said.
Expressing concern over Africa’s paradoxical export of raw materials juxtaposed with an influx of imported finished goods, Dangote underscored the urgent need to reverse this trend.
He lamented that exporting raw materials while importing finished goods perpetuated a vicious cycle of job loss and poverty.
Founded in 2012, the Africa CEO Forum, is a platform through which African decision-makers connect with each other continuously, as well as with international investors and institutions operating on the continent.
It has evolved into an organisation dedicated to facilitating business in Africa through the exchange of ideas and experiences.
. . . As Dangote Cement, Airtel, Seplat Top Awards
The Institute of Chartered Accountants of Nigeria (ICAN) and the NGX Regulation Limited (NGX RegCo) on Friday, 17th May held the maiden corporate reporting award.
Biztellers reports that the award recognizes the top 30 most capitalized companies listed on the Nigerian Exchange (NGX) for the 2022 financial reporting year.
It was gathered that the awards underscored both organization’s shared commitment to fostering transparency, accountability, and international best practices within the private sector. Evaluation criteria included financial reporting, corporate governance, and sustainability reporting.
Dangote Cement secured the top position across all three categories, earning the Platinum award alongside the best-in-class award of excellence in corporate governance. Airtel clinched the gold award, securing the second position and the best-in-class award of excellence in financial reporting for the period under review.
Seplat Energy was honored with the Silver award while also receiving the best-in-class award for excellence in sustainability reporting.
President, ICAN, Dr. Innocent Okwuosa, commended NGX RegCo for ensuring better disclosures and reporting among listed companies.
He noted that corporate reporting had evolved over the years from the time that most of its content focuses on financial reporting to when there emerged the clamour for incorporation of social and environmental disclosures.
He emphasized the evolution of corporate reporting over time, highlighting the shift from a primary focus on financial reporting to the increasing request to incorporate social and environmental disclosures, noting that “the latter has evolved and have been differently propagated including but not limited to Environmental Social and Governance (ESG) disclosure and of late sustainability disclosures”.
Dr Okwuosa added that good corporate reporting must reflect the best elements in corporate governance, financial, and sustainability reporting, highlighting that the maiden edition is limited to NGX-30 companies for ease of administration and will be extended to all the listed companies in the future.
On his part, CEO, NGX RegCo, Olufemi Shobanjo, highlighted that “without a doubt, transparency is one of the key drivers of any economy. It ensures full disclosure of information by entities and that such information is easily accessible to members of the public to make informed decisions.
“Over the years, there has been an evolution in the type and quality of information demanded, driven by heightened expectations from investors, decision-makers, and society as a whole.”
He added that “while financial reports remain at the forefront of information required by stakeholders, the concept of Environmental, Social and Governance (ESG) considerations has become an area of increasing interest to both public and private sector stakeholders”.
Shobanjo attributed this to the interplay between ESG and key issues such as sustainable development, corporate governance, climate change, stakeholder engagement, and community relations amongst a myriad of other issues.
“Stakeholders are beginning to demand more accountability, and companies are required to think beyond just profitability by expanding their scope to include the ethical impacts that their operations have on society or communities within which they operate,” he added.
He concluded that “as a self-regulatory organization, NGX Regulation remains committed to ensuring that the expectations of investors and other stakeholders regarding access to quality information are met.”
. . . Tinubu Lauds NNPC Ltd, Partners Over Three Commissioned Gas Projects
In line with its renewed hope agenda, the Federal Government has reiterated determination to utilize Nigeria’s abundant gas resources towards revamping her industrial growth and kick-starting economic prosperity.
Biztellers reports that President Bola Ahmed Tinubu made the assertion while commissioning three critical gas infrastructure projects executed by the NNPC Limited and its partners in Ohaji-Egbema, in Imo State and Kwale, in Delta States, on Wednesday.
The three projects commissioned include the expansion of the AHL Gas Processing Plant, the ANOH Gas Processing Plant and the 23.3km ANOH to Obiafu-Obrikom-Oben (OB3) Custody Transfer Metering Station Gas Pipeline Projects.
He said, “It is pleasing that approximately, 500MMscf of gas in aggregate would be supplied to the domestic market from these two Gas Processing Plants, which represents over 25% incremental growth in gas supply.
“In practical terms, this translates into more gas to the Power Sector, Gas-Based Industries, and other critical segments of the economy.”
The President pointed out that from the onset, his administration was clear of its intention to leverage on the virtually unlimited capacity of gas to deepen domestic gas utilization, increase national power generation capacity, revitalize industries, and create multiple job opportunities for economic growth.
He said aside the Presidential Compressed Natural Gas (CNG) Initiative which is aimed at moving Nigerians away from petrol and diesel as vehicular combustion fuel, significant progress has also been recorded in incentivizing gas development through Presidential Executive Orders.
While congratulating the projects partners (NNPC Limited, Sterling Oil Exploration & Energy Production Company Limited (SEEPCO) and Seplat Energy for the successful implementation of the three projects, Tinubu particularly charged the NNPC Limited to, as the national energy company of choice, sustain its relentless efforts and record more successes in the energy sector for the benefit of all Nigerians.
President Tinubu described the commissioning as a highly significant milestone for Nigeria as it demonstrates his administration’s efforts to accelerate the development of critical gas infrastructure geared at enhancing the supply of energy to boost industrial growth and create employment opportunities.
He said the projects were fully in line with the Federal Government’s Decade of Gas initiative, and his administration’s quest to grow value from the Nation’s abundant gas assets while concurrently eliminating gas flaring and accelerating industrialization.
“I wish to assure the citizenry that these are just the beginning, as the federal government is stepping up its coordination of other landmark projects and initiatives that will ensure the earliest realization of gas fueled prosperity in our country.
“Consequently, I wish to assure investors in the energy space that this is an investment enabling government and we will not relent in facilitating the ease of doing business,” the President noted.
Earlier in his address, the Minister of State for Petroleum Resources (Gas) Rt. Hon. Ekperikpe Ekpo highlighted the efforts of his ministry to continue to champion the utilisation of gas as a transition fuel as Nigeria moves towards achieving clean energy efficiency and security by 2060.
Ekpo commended the President for his leadership and support towards the success of the three projects.
In his remarks, the GCEO NNPC, Mele Kyari described the commissioning as a demonstration of Mr. President’s commitment and support to grow the domestic utilization of natural gas for power generation, as feedstock for gas-based industries and overall rapid industrialization of Nigeria on the back of the enormous gas resources in the country.
Kyari assured that as part of its mandate, NNPC Ltd remains committed to maintaining energy security by executing more strategic gas projects for the benefit of Nigeria.
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