The lady is not for turning

A war of attrition between legislators demanding that Arunma Oteh, the director of the Securities and Exchange Commission, stand down and her refusal to go could be damaging to the country’s capital market. The legislators are withholding state allocations to the exchange in retaliation. Frederick Mordi has the details.

For some time now there has been a ‘Cold War’ between the director-general of the Securities and Exchange Commission (SEC), Arunma Oteh, and the Federal House of Representatives. Trouble started brewing after Oteh, a former vice president of the African Development Bank (AfDB), openly accused one of the lawmakers, Herman Hembe, of soliciting a bribe from the commission, at a public hearing on the activities of SEC in Abuja, the nation’s capital, last year.

Hembe was the chairman of the committee on capital market set up to probe SEC over the near collapse of the Nigerian capital market in 2008. SEC regulates activities of the nation’s capital market. Oteh made the revelation after facing rigorous grilling by Hembe, who questioned her competence to head the commission. This did not go down well with the legislators who were embarrassed at the accusation that eventually led to Hembe’s removal as chairman of the committee. The Economic and Financial Crimes Commission (EFCC), Nigeria’s anti-corruption watchdog, later charged Hembe to court to defend this allegation.

Having tried without success to remove Oteh from her position, the aggrieved lawmakers took the campaign a step further by withholding the statutory allocation due the Commission for the fiscal year 2013, ostensibly to starve SEC of funds and eventually force her to resign.

But she has so far refused to throw in the towel. She enjoys the support of President Goodluck Jonathan, who has resisted intense pressure from the lawmakers to remove her from office. The President appoints the directorgeneral of the commission. Jonathan had asked the legislators to reverse the zero allocation policy, warning that this could have a negative effect on the capital market. In a letter to the National Assembly, he said: “The 2013 Appropriation Act includes some clauses which may be injurious to the spirit of separation of powers and which could hamper the work of the executive arm of government. I, therefore, request that these should be reviewed.”

The president also asked the legislators to amend section 10 of the 2013 Budget which read inter alia; ‘All revenue however described, including all fees, fines, grants, budgetary provisions and all internally generated revenue shall not be spent by the Securities and Exchange Commission for recurrent or capital purposes or for any other matters, nor liabilities thereon incurred except with prior appropriation and approval by the National Assembly.’

Jonathan added: “The import of clause 10 is tantamount to shutting down the business of the Commission with a potential negative impact on the capital market.” But the lawmakers have stuck to their guns. In a chat with journalists after passage of the budget last December, House spokesman, Zakari Mohammed said the House will not rescind its decision until Oteh quits her job. Mohammed said: “The Senate is with us on this matter; Oteh must go as far as we are concerned. If she doesn’t go, we won’t touch the budget. We still maintain that stand; it has not changed. As far as we are concerned, as an institution, we won’t have any dealings with them.”

Analysts, who reviewed the situation believe the lawmakers erred by denying the commission its budgetary allocation to blackmail Jonathan into bowing to their demand. Only the President, they point out, has the statutory responsibility of hiring and firing the director-general of the commission. Besides, they contend that it is morally wrong for the legislators to withhold the allocation of the regulatory body because of their spat with Oteh, noting that the workers of the commission are being made to suffer unnecessarily.

They recalled that the legislators also have a running battle with the governor of the Central Bank of Nigeria (CBN), Mallam Lamido Sanusi, over the perceived uncomplimentary comments that he made about their remuneration some time ago. Keen watchers of the Nigerian political economy say the proposed amendment of the CBN Act by the lawmakers is meant to clip Sanusi’s wings. The lawmakers’ calls for Oteh’s removal follows a familiar pattern.

A source close to Oteh said her competence has never been in doubt, as she parades impressive academic credentials. Oteh holds a first class degree in Computer Science and an MBA from Harvard Business School. Oteh had a distinguished track record in the financial services industry across the world, rising to the position of vice president of the AfDB becoming the first female Nigerian to hold the position. Observers say that her appointment as SEC director-general in January 2010 was based purely on merit. Her capital market experience, which spans some 28 years, also makes her suitable for the job, the source pointed out. One observer said: “Oteh is clearly qualified to run SEC or any other government establishment for that matter. She has the experience required for the job. She is being victimised because of her stand against corruption.” Analysts appear to share these views noting that beyond her academic credentials, Oteh’s record of stewardship as regulator of the Nigerian capital market has been quite outstanding.

They note that all critical performance indicators of the Nigerian Stock Exchange (NSE) have rebounded, while the market capitalisation of the NSE increased by 67.75% in the past one year. Under her watch, the Nigerian capital market was ranked among the top four performing capital markets in the world in 2012. This exponential growth is triggered by increasing investor confidence in the economy.

At the end of February 2013, local investors accounted for 61% of transaction value in the Nigerian capital market, leaving foreign investors with 39%. This is a remarkable improvement over the position in 2009 when local investors practically shunned the market due to heavy losses they suffered in the aftermath of the near collapse of the capital market in 2008. Foreign investors controlled about 80% of transactions in some instances, then.

According to a report by Lead Capital, this positive growth trend in the capital market is likely to persist this year. The Nigerian equities market currently ranks third in terms of capital gains when compared to major markets. The Nigerian market is also described as the second best in Africa after Kenya; the average daily trade is slightly above 600m shares compared to 360m shares recorded for the same period in 2012. The report added that this reflects improved market liquidity and confidence with more investors coming on board. Indeed, this year alone, dozens of foreign investors have visited Nigeria and have made commitments to embark on bigticket projects in critical sector of the economy such as infrastructure and manufacturing.

American Fortune 500 Company, General Electric (GE), Turkey, Poland and Canada are some of the countries that are seeking investment opportunities in Nigeria. According to the 2012 World Investment Report by UNCTAD, Nigeria emerged Africa’s biggest destination for foreign direct investment (FDI) in 2011 with $8.92bn.

Based on the relative success recorded during Oteh’s tenure, particularly with regard to the growth in capital market, she is winning more support from critical stakeholders in the economy. The Trade Union Congress of Nigeria (TUC), for instance, berated the lawmakers’ decision to withhold allocation to SEC describing it as ‘undemocratic’. TUC president, Peter Esele, who said it that it was morally wrong for the legislators to vent their spleen on Oteh at the expense of the workers, seeks a quick resolution of the matter. Jonathan’s support for Oteh has been resolute despite increasing pressure from lawmakers.

This has perhaps encouraged her to face her opponents with a degree of equanimity.