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Former Minister of Finance, Zainab Ahmed. Photo/Twitter/FinMinNigeriaThe Investment & Securities Act (ISA 2007) specifically provides for the establishment of a board for the Securities & Exchange Commission (SEC) and outlines its functions. The board is the organ of the commission responsible for policy formulation and decision-making at the highest level. It supervises the affairs of the commission and ensures that it discharges responsibilities towards effective regulation and development of the capital market. Regrettably, the SEC has been operating without a supervising board since 2015 when President Muhammadu Buhari assumed office. The absence of SEC board for the past four years has left a serious vacuum in the performance of the commission. The supervising ministry of finance has not succeeded in filling the gap as it grapples with its duties as the fiscal authority without a supervising board for such a delicate and important national organisation. The director -general of the commission tends to function as a sole administrator. The Guardian’s investigations into the composition of the board for the SEC showed that the ISA stipulates that this shall include a part-time chairman, the director-general and chief executive, as accounting officer. There are also three -full time commissioners, a representative of the Federal Ministry of Finance, a representative of the Central Bank of Nigeria, and two part-time commissioners, one of whom shall be a legal practitioner qualified to practise in Nigeria with 10 years post-call experience. The ISA vested the board of SEC with the mandate for “general administration of the commission”, which particularly, includes the formulation of policies for the regulation and development of the capital market, the exercise of the functions of the commission, approve the audited and management accounts of the commission and appoint auditors for the commission. Also, the board is statutorily responsible for consideration and approval of the yearly budget of the commission as may be presented to it by the management, establishment of zonal offices of the commission and sundry activities, as necessary and expedient for the purposes of achieving the objectives of the commission. Besides, the board is empowered, on the recommendation of the director-general, to approve the duties of the full-time commissioners and the reassignment of the full-time commissioners. The tenure of the board is four years, though the director-general and full-time commissioners may be reappointed for another second and final term of four years. While the ISA provides for the extension of the tenure of the director-general and “any of the commissioners whose term of office has expired until a successor to such director-general or commissioner is appointed, the law does not make any adhoc provision for the board as a whole. Already, analysts, operators and investors have described the absence of a constituted board for the SEC by the Federal Government as the height of regulatory lapse, insisting that this threatens efforts at restoring confidence in the market. The stakeholders who are currently questioning the corporate governance standard of the apex market regulator, wondered why the government has prolonged the issue of reconstituting the board of the SEC, almost three years after the previous board was dissolved. According to them, the lack of confidence in the market currently is not only triggered by election risks and uncertainties, but also the way government treats capital market issues with levity. Furthermore, they argued that SEC is sitting on investment worth over N26 trillion in value, and must operate with a complete board to manage such a huge investment properly. They also pointed out that the prolonged delay portrays poor corporate governance standard, noting that foreign investors cannot invest in a jurisdiction where corporate governance practice is questionable. The pedigree of those who constitute the board of an apex regulatory body like the SEC is an important factor that propels investors’ confidence. Without the board, administration of regulatory framework cannot be said to be complete because of its vital role. They added that investors are dissuaded by unilateralism and totalitarian tendencies in the capital market. Specifically, a former Director-General (DG) of the SEC, Wole Adetunji described the issue as ‘unfortunate’, nothing that it has not happened in the history of the capital market. He warned that SEC, operating without a board, would affect corporate governance standard of listed companies they regulate, because it is the function of the entire board to monitor activities of quoted organisations. According to him, government failed to realise that the economy cannot grow with funds from the money market alone, because they do not have guidance for the market. He said: “SEC is so unfortunate. How can a regulator of listed companies operate without a board for a long time and even now, without an executive management? It is unheard of and it is unfortunate. Since 1939, the United States’ SEC has not been without full a board, but in Nigeria, we treat things anyhow. “It is affecting the market because they are there temporarily. So, there will be no full devotion. Look at the Central Bank of Nigeria (CBN), the monetary policy committee will do something and it will work out without any battle, but nothing is working in SEC and we want to develop the market. The minister of finance would have been in a better position to do so. “The roles of the regulatory authorities in ensuring financial sector stability and efficiency of financial intermediation cannot be over- emphasised. Having no board is not in line with international best practice and international market standard.” It is worthy of note that globally, the SEC operates as a regulatory body of the government of the country with a chairman who is nominated by the central government. For instance, the Securities and Exchange Commission of India (SEBI) hierarchical organisation structure consists of nine members: a chairman nominated by the Union Government of India, two members who are officers from the union finance ministry and one member from the Reserve Bank of India. SEBI is run by a board of directors, which consists of the chairman who is elected by the Parliament of India; two officers from the union finance ministry; one member from the Reserve Bank of India; and five members who are elected by the parliament, like the chairman. Similarly in Zambia, the Securities and Exchange Commission (SEC) is the regulator of the capital market. It was established through an act of parliament, the securities Act no. 41 of 2016. Its role as regulator is important for ensuring: supervision and development of the Zambian capital market, licensing, registration and authorisation for financial intermediaries, issuers of debt and equity instruments and collective investment schemes. The functions of the commission are vested in the board, which is appointed by the minister of finance in accordance with the provisions of the Securities act. Also, during the financial meltdown, the US financial leadership dealt with the crisis using the secretary of treasury, the chairman of the Federal Reserve board and the chairman of SEC but in Nigeria, it is like the SEC is of no importance to the government. The issue of wholesale dissolution of boards of government parastatals has been a recurring problem in public administration in Nigeria. The practice is retrogressive and disruptive. The sole reason for this unwholesome practice is politics. For instance on June 3, 2015, the office of the Secretary to the Kaduna State Government (SSG) announced the immediate dissolution of all boards and the termination of the appointments of all chief executives of parastatals and agencies in Kaduna State, including all the 23 local government council chairmen and other sundry political appointments made by the immediate past administration in the State. The dissolution came few days after the state executive council (comprising the honorable commissioners), the local government councils, and all other political appointments like special advisers, senior special advisers, special assistants, community facilitators, etc were dissolved at the last state executive council meeting with handover already done. Also, in October 2018, the Ekiti State government ordered the immediate dissolution of the boards of government agencies, parastatals and corporations in the state. The chairmen of the boards of the agencies during the period were directed to hand over to the most senior officer in their respective agencies. Furthermore, the Lagos State government in June 2015 approved the dissolution of all boards of parastatals and agencies of government in the state with the exemption of the state civil service commission, judicial service commission and the state independent electoral commission. According to the directive, heads and chief executives of government- owned agencies and parastatals were not affected by the dissolution of boards of parastatals and agencies. A professor in the Dept of Business Law, College of Law, Igbinedion University, Okada, Professor Nat Ofo said: “The sole reason for this unwholesome practice is politics. Sadly, that consideration is given more preference vis-à-vis continuity, integrity and the prosperity of the nation. Government is a continuum. “In that wise, when there is a new government the programmes and policies of the previous government need not be jettisoned, if they are for the good of the country as a whole. Closely related to that is that the boards of parastatals should be left alone to continue with their programmes and projects. “Reconstituting the board when there is a new government, from experience, is disruptive and stalls rapid progress and continuous development in the affected parastatals as the new team would need time to settle down and chart their own course of action. “Worse still, if the appointments have heavy political undertone, other factors may become more dominant instead of the good of the nation. The matter is even worse where boards are dissolved and not reconstituted. This most definitely has a grave and negative impact on the citizens, the nation and the economy as a whole.” A Professor of Capital Market and the Head, Banking and Finance Department, Nasarawa State University Keffi, Prof. Uche Uwaleke argued that an effective coordinating structure is needed to stem the increasing level of failed banks in Nigeria. He argued that the SEC is a very critical institution in the financial sector and indeed the nation’s economy. “Its primary responsibility is to protect the interest of investors and for which it has to ensure that the market is properly regulated. According to him, SEC cannot carry out this function effectively without a board, which ordinarily ensures that the institution is well governed. “The development of the capital market requires certain strategic decisions that cannot be taken at the level of SEC management. Some may involve spending requirements beyond the approval limit of the DG. “Even when these approvals are obtained from the minister of finance, they do not enjoy the benefit of a robust debate, which only a properly constituted board provides. “The way forward is to constitute a board for SEC as quickly as possible as this would go a long way in boosting investors’ confidence. The government should also consider granting some autonomy to the commission just like the CBN.” According to the Managing Director of Highcap Securities, David Adonri, in Nigeria, government lays more emphasis on short-term money market / banking activities, which fuels a mercantile economy instead of seeking to develop both the capital market and the money market in a balanced manner. He noted that without a vibrant capital market, long-term capital formation critically required for the creation of domestic wealth and generation of productive employment would continue to elude the nation. “It is not likely that the Federal Government which sees nothing wrong in having no SEC board will allow the Central Bank of Nigeria (CBN) to operate for one minute without a board because the CBN prints transaction money for them. The continued absence of a board for SEC is a national disgrace. Remedial action must be taken without further delay,” he said.