Stakeholders have said President Muhammadu Buhari’s assent to the Companies and Allied Matters Bill 2020, consequently introducing the Companies and Allied Matters Act (CAMA) 2020, to replace the 30-year old CAMA 1990, will spur economic development and reposition Nigeria as a compelling destination for investment.
The stakeholders, who described the move as historic said it will usher in a new paradigm in the Nigerian financial market, in addition to improving the ease of doing business.
They maintained that with the increasing sophistication of global financial markets, there is a need for domestic markets to develop their infrastructure to support requisite advancement, as well as align with international standards.
Specifically, a Professor of Economics, at the Babcock University, Segun Ajibola, said the newly-signed amended CAMA will enhance the ease of doing business in Nigeria, while also strengthening accountability among the top management.
Ajibola said: “CAMA is the flagship law governing the behaviour of corporate institutions of all categories in Nigeria. Unfortunately, the Act passed in 1990, has since become out-dated due to the several changes in business dynamics and paradigms across the globe.
“The newly-signed amended CAMA is capable of making the day to day running of registered business houses in Nigeria much easier for stakeholders, and promote accountability on the part of top management staff and the directors.
“In addition, it would also strengthen the ease of doing business in Nigeria, and the capacity of the government to generate higher revenue from company income tax and other revenue heads through improved reporting standards. It will also attract foreign investments into the country.”
The Chief Executive Officer of FMDQ Group, Bola Onadele, said the CAMA 2020 has commendably set the tone for the actualisation of key innovations in the market, providing enabling legal backing for netting, bankruptcy remoteness, and attendant regulatory frameworks for the smooth functioning of financial markets in Nigeria.
According to him, FMDQ Exchange is a market organiser for the fixed income, foreign exchange and derivatives markets in Nigeria, and given the domestic and global call to improve participation in the markets by providing hedging opportunities to support investor interest, the exchange is set to support the establishment of a well-functioning derivatives market.
This follows its launch of a Derivatives Market Project in 2017, and the planned activation of derivative products in 2020, to hedge interest rate risks.
“This is in addition to the existing currency risk hedging product, the OTC FX Futures product. To ensure the successful activation of the derivatives market, FMDQ Clear, Nigerian’s first central clearing house (CCH), is well-positioned to providing the much-needed CCP services, upon regulatory approval.”
He further said the contributions of all the Nigerian financial system regulators in the market development cannot be overemphasized. With the foresight of the Securities and Exchange Commission (SEC), in approving the registration of the FMDQ Entities, the erstwhile OTC market in 2012, FMDQ Clear in 2017, and FMDQ Depository, and FMDQ Exchange, in 2019, provides a one-stop shop for the end-to-end execution of financial market transactions.
“Further, the Central Bank of Nigeria (CBN), introduced in 2016, with FMDQ Exchange, the OTC FX Futures market, ahead of the launch of other derivative products, which fostered stability in the FX market, with circa $50.00 billion worth of contracts so far executed on FMDQ Exchange and cleared by FMDQ Clear.”
Analysts opined that the Nigerian economy is bound to witness a more attractive financial system that will galvanise foreign capital flow, improve trading and funding liquidity of the markets, attract human capital and cause reduction in cost of capital.
This follows the improved regulatory landscape, adoption of liberalised markets, especially in foreign exchange, promotion of improved risk management standards and financial markets stability, catalysed by the emergence of a derivatives market and a functioning central counterparty clearing house (CCP).
This is expected to boost the nation’s reserves, thereby engendering the much-desired economic transformation, and ultimately positioning Nigeria and Nigerians for prosperity.