Adeosun’s swift and decisive move on SEC

Last week was not such a good week for the Nigerian equities market. And this was not in the least the result of developments to do with demand and supply economics; to wit, whether or not shares were being lapped up or dumped.

No, nothing of the sort!

The drama began to play out with the confusion over the status of  Oando Plc’s shares that had been on suspension on the floor of The Nigerian Stock Exchange since last year. It had stayed so long suspended that at some point you would have been forgiven if you had likened it to the kind of suspension that happens at the National Assembly, where the real intention is to orchestrate a suspension so that you can be dumped and forgotten, if you did not pull some weight of your own to lobby or fight and get your suspension lifted.

We believe suspension matters involving the shares of listed companies on the Stock Market are more delicate and require better, more professional and swifter handling than you would expect from the likes at the Nigerian National Assembly. For one, there is the company and then there are shareholders of all hues.

And then there is the sensitivity of the market. The reading of the actions of regulators can be interpreted by everyone involved with respect to their different idiosyncrasies. Once a wrong foot is put forward through sloppy handling of what is supposed to require swift and decisive actions, then regulators open themselves up to all sorts of suggestions, even accusations.

It is our view that regulators have been sloppy and careless in the handling of this matter of Oando Plc. In their carelessness and sloppiness, they displayed their insensitivity to the fact that there are different categories of shareholders. We think that regulators have had their gaze too focused and have not being taking in the full picture of what was in front of them, hence their failure to act swiftly and dispense with the matter in a manner that would have been seen to be transparent and fair to all concerned.

Some groups of Oando’s shareholders have been staging protests over their plight following the prolonged suspension of their shares from trading.

We think that beyond the matter of litigation and the forensic audit being carried out on the company, some sensitivity should have been shown with regards to shareholders whose primary interest is in watching what the opinion of the market is regarding their shares. Since October when the suspension was placed, they had waited patiently; and for what was usually a short-term measure, their patience had been tested. And then came the drama last week.

First, there was the announcement of the lifting of the suspension; then the confusion followed with a cancelation of the lifting of the suspension.

It was the sort of thing that would make you stop and wonder what was going on, how it is that high-level regulators could not get their act together to do something so simple, properly. It was, indeed, an embarrassing moment, not only for the Securities and Exchange Commission (SEC), The Nigerian Stock Exchange (NSE), and the personalities involved but the entire capital market and the country as a whole. For one, the drama surrounding the Oando story is being followed globally, especially because there are international investors holding the company’s shares; besides being quoted on the Johannesburg Stock Exchange.

International investors are always on the lookout for stories like this. They are savvy at responding to development on the basis of information that they receive, which helps them gather fundamentals about what shapes every investment destination they would like to proceed to or those that they are already in. It is on the basis of this that we are of the view that this market was let down last week by those who should have known better.

The SEC leadership made a wrong call with the flip-flop. And so did the Nigerian Stock Exchange, who should have been more circumspect given their vast knowledge of the issues involved. As information unravelled last week that the management of SEC made decisions without Board approvals, we think it was naive on their part not to have carried
everyone along, given the weighty nature of the Oando plc saga.

We are however reassured by the decisive way the Finance Minister, Kemi Adeosun, stepped in to swiftly take control of the situation. She showed in her decision that first, she would not again allow this Oando matter to embarrass Nigeria and herself in particular, knowing that there had been an attempt previously to drag her deep into it. If she had not acted swiftly and decisively, what happened last week would have lingered on and we would have opened the week still confused about it and maybe something more onerous would then have unfolded this week. And that would have given the market a bad name.

While we commend the Minister’s actions last week, we would also suggest that this offers an opportunity for an active engagement with the market.