The Governor of Central Bank of Nigeria (CBN) Sanusi Lamido Sanusi has said that Financial Market Regulators are continuously embarking on reforms to fine tune the market to achieve the needed growth in the economy.
Sanusi who said this during the 7th Annual PEARL awards lecture for capital market development, noted that regulators like CBN and securities and Exchange Commission (SEC) would continue to adopt appropriate measures to ensure that the financial system is well equipped to stimulate economic growth.
The CBN governor who was represented by Kingsley Moghalu, deputy governor, financial system stability, said that the state of the Nigerian capital market is largely affected by the state of the banking sector, adding that the reforms undertaken in the banking sector by the CBN aided that undertaking by other regulatory bodies.
In the lecture titled – “The Impact Of The Global Financial Crisis On The Nigerian Capital Market And The Reforms,” the CBN governor noted that in performing its developmental role, the SEC has undertaken a number of reform activities which aims at instilling transparency, good corporate governance and encouraging disclosure to build investors’ confidence in the capital market.
“It is imperative that any reform of the capital market must ensure that operators are perceived to be transparent by investors. Meaningful reform of the capital market must include addressing corporate governance of entities and players in the market. In recognition of this fact, the Commission includes a review of the 2003 corporate governance code in its capital market reform in order to address weaknesses in current practices and strengthen governance and disclosure by public companies,” Sanusi said.
The apex bank, Sanusi mentioned, also believes that the adoption of International Financial Reporting Standards (IFRS) by listed companies and regulated entities is expected to improve the quality of financial reporting in the country and give further credibility to the reports. Publicly listed companies and significant interest entities such as banks are required to adopt the IFRS in reporting their financials by January 2012.
The CBN boss is firmly of the belief that economies require long term capital investment for productive activities that produce goods and services that drive economic growth. “The surplus sector (households) is usually unwilling to surrender control of its savings for a long period. The capital market bridges this gap by providing an arrangement where organisations can raise long term capital while providing investors the flexibility to liquidate their investment without holding them to maturity,” Sanusi said at the lecture.