The new SEC Appointments: Renewed hope for Nigeria’s capital market?
President Bola Ahmed Tinubu’s mandate to Emomotimi Agama, the new Director-General of the Securities and Exchange Commission (SEC) with the new SEC leadership, is to regulate the capital market to bolster investor confidence and advance economic development. Can the new SEC boss “turn the tide” in Nigeria’s long-suffering blockchain & crypto industry where innovators always find themselves building against the tide?
The immediate former Managing Director at the Nigerian Capital Market Institute (NCMI), Dr. Agama, was appointed DG of SEC by President Bola Ahmed Tinubu on Friday, 19 April 2024.
Dr. Agama, who is no stranger to the SEC, replaces the former Director-General, Lamido Yuguda. Apart from Dr. Agama, the other appointed persons to the SEC board are as follows:
- Frana Chukwuogor, Executive Commissioner (Legal and Enforcement),
- Bola Ajomale, Executive Commissioner (Operations),
- Samiya Hassan Usman, Executive Commissioner (Corporate Services)
- Lekan Belo, Non-Executive Commissioner
- Kasimu Garba Kurfi, Non-Executive Commissioner
Dr. Agama is expected to bring his wealth of experience, particularly in the capital market, to bear. He is the immediate former Head of Registration Exchanges and Market Infrastructure, Head of Public Offerings, and served as special assistant to the SEC’s Executive Commissioner, Operations for eight years. Dr. Agama, no doubt, has the requisite expertise and experience to lead the SEC.
Dr. Agama is pro-crypto regulation, emphasizing the need to ensure consumer protection and investor safety without stifling innovation.
Following the restriction of crypto transactions in Nigeria’s banking and financial system by the then Godwin Emefiele-led Central Bank of Nigeria (CBN) in February 2021, Dr. Agama, who was at the time the former Head of Registration Exchanges and Market Infrastructure at the SEC, maintained that it was important for Nigeria to review, understand, appreciate, and introduce regulations. According to him, this also ensures that Nigeria introduces regulatory frameworks that help to guide the movement of the crypto market toward driving foreign portfolio investment and foreign direct investment (FDI) into the country and build Nigeria’s capital market.
In Dr. Agama’s words as published by the Cable in February 2021, “There is a lot of investment move into the cryptocurrency market and the tendency is that it will reduce the amount of investments in the stock market. Part of the desire of the SEC even in the future is to provide a regulatory framework that will take care of all these challenges that we have seen internationally and the entire world is grappling with in terms of cryptocurrency and digital assets”, he said.
“For us at SEC and the capital market, it is something to look at. The world cannot be moving forward and we will be static, no. It is important for us to review, understand, appreciate and introduce regulations that will guide the movement of the market in this direction.”
Indeed, the crypto industry as a subsector of the capital market offers great potential for Nigeria’s economic growth and development, if well harnessed and regulated. This is a $2 trillion global market. Considering that Nigeria is a global leader in crypto adoption, one would have expected the Nigerian government to be more strategic in this regard. “A market that has [an] opportunity for ICOs, derivatives, is not a market we can ignore”, pointed out Dr. Agama in the Cable publication. He continued, “It is our desire that we do more work, collaborate as regulators and analyse to make sure that we provide a level playing field where Nigerians, international investors and whoever is interested in this space will be comfortable and happy.”
Nigerians, international investors, and other players in the crypto space not “comfortable and happy” with the state of crypto regulation in Nigeria today
To say that over 3 years after the crypto restriction by the CBN, Nigerians, international investors, and others who are interested in Nigeria’s crypto space are not “comfortable and happy” may be an understatement today.
Till date, no crypto operator is permitted to have access to a bank account. Up to 24 months after the SEC issued its regulatory framework for digital asset operations in the capital market, no crypto operator has been registered or licensed in Nigeria.
But in the absence of a licensing regime, the Nigerian crypto space has witnessed increased crackdowns and restrictions, particularly by law enforcement agencies. The allegations? From money laundering to tax evasion, terrorism financing and currency manipulation, executive actions are being taken by government agencies. These actions are not only to safeguard national security but to also rebuild confidence in the Nigerian economy by saving the Naira against what has been alleged to be a crypto-driven FX speculation in the country.
While the CBN has effectively lifted the “crypto ban” having issued guidelines on the operation of bank accounts by virtual assets service providers (VASPs) in December 2023, not much has changed. This is because registration and licensing is yet to get started in Nigeria. The proposed amendments to the SEC Rules on digital assets, which was obviously informed by the CBN’s December 2023 position, are yet to be finalized. This is not forgetting the extremely disruptive investigations, arrests, and prosecutions involving Binance, the biggest crypto exchange in the world.
Meanwhile, South Africa, Dubai, and some other jurisdictions considered crypto-ready and crypto-friendly, have continued to attract some local and foreign crypto operators, including digital asset exchanges.
Read also: Finally, ‘crypto ban’ in Nigeria lifted by the CBN
President Tinubu’s mandate to Dr. Agama and the new SEC leadership is to regulate the capital market to bolster investor confidence and advance economic development
In his appointment of the new SEC leadership, the President “anticipates that all members of the Board … will bring to bear their wealth of experience and competence in advancing the commission’s core mandate of developing and regulating a capital market that is dynamic, fair, transparent, and efficient, to bolster investor confidence and contribute immeasurably to the nation’s economic development”.
Interestingly, the mandate and expectation of the Presidency above is re-echoed in one of Dr. Agama’s remarks in February 2021. Back then, Dr. Agama expressed his hope that crypto adoption and regulation in Nigeria’s capital market could help Nigeria attract foreign portfolio investment and foreign direct investment into Nigeria.
In Dr. Agama’s words: “I hope that in doing that, we are going to be able to drive foreign portfolio investment, foreign direct investment (FDI) into this country and build our capital market.” It is all about ensuring that Nigeria’s capital market is not only conducive for investments but also globally competitive.
So one could say that Dr. Agama’s vision for the crypto sector is consistent with President Tinubu’s promise to Nigerians. In his manifesto, President Tinubu promised that, if voted into power, he would “reform government policy to encourage the prudent use of blockchain technology”, “review the existing regulatory environment governing blockchain technology and virtual asset services and, where necessary, suggest changes create a more efficient and business-friendly regulatory framework”.
Similarly, the National Blockchain Policy which was approved by the Buhari administration in May 2023 states that “[t]he Nigerian Government recognises cryptocurrency as one of the components that will catalyse the adoption of Blockchain Technology”. Hence, the Policy states that the Nigerian Government will “[provide] a framework for the use of cryptocurrencies, among others, which can help to mitigate risks such as money laundering and fraud”.
Having shown the will over the years, Dr. Agama, with presidential backing and policy support, now has a way as the new Director-General of Nigeria’s capital market regulator.
Read also: Luno and Zignaly become first to receive crypto licenses in South Africa.
Blockchain industry stakeholders confident Dr. Agama’s appointment as new DG of SEC could “turn the tide”.
Adedeji Owonibi, Founder & Chief Operations Officer of Convexity and Senior Partner of A&D Forensics also shared similar sentiments about the capacity and ability of Dr. Agama to “turn the tides” and position Nigeria as a leader in crypto innovation in Africa. According to Mr. Owonibi: “The President’s appointment of Dr. Agama, a blockchain expert and pro-crypto to head SEC Nigeria is a testament that Nigeria wants to turn the tides in order to harness all the benefits and cover lost grounds in positioning Nigeria as a crypto Valley in Africa. Big congratulations!”
Similarly, Lucky Uwakwe, Chairman of Blockchain Industry Coordinating Committee of Nigeria (BICCoN) and Founder at SaBi Exchange, in his congratulatory message, had this to say: “Congratulations to Timi Agama ACMA CGMA ACIS MCSI PhD on being appointed as the new Director-General of Security and Exchange Commission Nigeria!” Mr. Uwakwe described Dr Agama’s appointment by President Tinubu as a “wise decision”, considering the new Director-General’s wealth of experience in the capital market. “President Bola Tinubu has made a wise decision in appointing Timi Agama, who has a wealth of experience in Blockchain, ICT, technology, security and capital market, and compliance”, said Mr. Uwakwe. “We look forward to seeing the positive impact Timi Agama will have on the SEC and most importantly the blockchain ecosystem in Nigeria.”
Chimezie Chuta, Founder of Blockchain Nigeria User Group (BNUG) and Vice Chairman of BICCoN is “super bullish about the appointments and expects positive impact on Nigeria’s blockchain industry. In his words to CAB, “Emomotimi Agama as the newly appointed SEC DG is good for the crypto industry! Square peg in a square hole! Congrats to him! Even Bola Ajomale, as executive commissioner (operations) is a fantastic choice. These are people with forward-thinking and innovation mindsets that, I believe, will accelerate the process of mass adoption of blockchain and crypto in Nigeria. I’m super bullish on their positive performance.”
“Dr. Agama’s appointment is well-deserved,” says Stephen Azubuike, Partner at Infusion Lawyers. “He has enviable leadership qualities, and has demonstrated commendable capacity to tackle the demands of this dynamic sector and forge a new era. I’m quite optimistic seeing a man of great vision at the helm of affairs of the Securities and Exchange Commission”.
Seun Dania, Founder of TradeFada, a local digital asset exchange, also congratulates Dr. Agama and the rest of the newly appointed leadership team of the SEC. He described Dr. Agama’s appointments as “a well-deserved recognition of [his] expertise and commitment to the Nigerian capital market.” Mr. Dania appreciated the current administration “for recognizing the importance of selecting highly qualified individuals to lead this critical institution.”
Hoping that the new SEC leadership would turn things around, Mr. Dania expressed his confidence in the new SEC leadership, pointing to “the experience and qualifications of the team” which “ inspires confidence in the continued development and stability of the Nigerian capital market”. He continued, “We are particularly confident that the leadership team will play a vital role in the successful implementation of the much-anticipated virtual currency licensing regime. Their expertise will be instrumental in ensuring a framework that fosters innovation while protecting investors and maintaining market integrity. We look forward to the team’s contributions in fostering a dynamic, fair, transparent, and efficient market that protects investors, fuels Nigeria’s economic growth, and embraces the future of finance.”
Closing
The state of crypto regulation in Nigeria today will not bolster investor confidence and advance economic development as President Tinubu has mandated. Except the current regulatory approach in Nigeria changes, attracting foreign portfolio investment and FDI into the country by accommodating crypto innovations in the capital market through a more responsive regulation will remain a pipe dream. Presently, except for its (potentially) big market, Nigeria is not a bride with suitors at the door. Far from it, Nigeria is scaring away its suitors, local and foreign suitors. And the gap between regulators and VASPs in the country is still a large one, often breeding distrust between regulators and innovators.
Policymakers, regulators, law enforcement agencies, and stakeholders also need a roundtable. The current distrust and disharmony is unhealthy, not only for innovation, but also for regulation. Consumer protection and investor safety can only be truly and sustainably achieved in a fair, transparent, and efficient market that is conducive for business.
Nigeria needs to do better.
As the new SEC boss, Dr. Agama has his work cut out for him.
Read also: Group Urges Nigerian Regulators to Rethink Approach to VASPs
