The Securities and Exchange Commission (SEC) has called on capital market operators (CMOs) in Nigeria to critically review the issuance of debt instruments by state and local government agencies. This recommendation was made by Bola Ajomale, SEC Executive Commissioner for Operations, during the 2024 International Credit Rating Webinar organized by DataPro Limited on October 10, 2024.
Ajomale highlighted that Irrevocable Standing Payment Orders (ISPOs) from state governments should not be the only measures for assurance and risk mitigation concerning debt instruments. He stressed the need for Credit Rating Agencies (CRAs) to adapt their evaluation metrics to accommodate rising risk levels and sustainability requirements associated with any debt issued by state or quasi-government bodies.
He expressed concerns regarding some state governments issuing private bonds guaranteed by the government, noting that these instruments often lack secondary market value. Ajomale emphasized the necessity of thorough assessments to ensure these bonds align with the intended project objectives.
During the webinar, participants were encouraged to explore the crucial role of CRAs in promoting sustainable economic development in Nigeria. This event, the fourth in its series, attracted over 500 participants from various countries, including the USA, Canada, South Africa, Ghana, Gambia, Namibia, Kenya, and Rwanda.
In his opening remarks, DataPro’s Founder, Abimbola Adeseyoju, reiterated the purpose of the webinar: to promote the value of credit rating institutions in Nigeria and across Africa. He emphasized that, beyond assessing asset and capital quality, CRAs should strengthen risk management processes while contributing to economic growth, particularly within the real sector, to foster sustainable wealth creation.
Keynote speaker Christian Ruehmer, an established international banking entrepreneur, urged banks to prioritize support for businesses in the real economy, highlighting the importance of collaboration between financial institutions and businesses to facilitate sustainable development.