SEC warns that lack of credible issuers may inflate asset prices in Nigerian capital market

The Director-General of the Securities and Exchange Commission (SEC), Dr Emomotimi Agama, has expressed concerns over the possibility that a shortage of credible issuers in Nigeria’s capital market could result in inflated prices for existing assets rather than genuine market expansion.

Addressing the University of Ibadan Alumni Association’s 2026 Annual Public Service Lecture on October 9 in Ibadan, Dr Agama highlighted that Nigeria tends to consume capital that could otherwise be invested in long-term, income-generating assets. He cited the University of Ibadan’s historical reliance on external funding as an example reflecting the broader national challenge of mobilizing capital.

Dr Agama underscored that expanding the capital market by merely attracting more investors will not suffice without a corresponding increase in credible institutions offering investment opportunities. He warned that a limited pool of reputable assets coupled with rising investor demand could artificially inflate asset prices rather than promote sustainable growth.

According to the SEC DG, the Nigerian capital market is facing a deeper issue related to the scarcity of institutions with strong governance, transparent financial statements, and trustworthy investment frameworks. Nonetheless, retail investor participation is growing rapidly, with targets set to reach 30 million investors by 2030.

This dynamic highlights the critical need to enhance the supply of credible investment options concurrently with efforts to broaden investor participation. The Nigerian Capital Market Masterplan envisions expanding market size from about ₦250 trillion to ₦750 trillion through reforms aimed at boosting efficiency, attracting investment, and increasing access.

Among ongoing reforms is the transition to a T+1 settlement cycle, officially implemented on June 1, designed to improve liquidity and reduce risks, aligning the market with international best practices.

Additionally, the SEC is leveraging technology to facilitate easier access to equity investment, including a subscription model tied to the Bank Verification Number system targeting up to 10 million investors across various income levels.

Dr Agama’s insights serve as a reminder that for Nigeria’s capital market to achieve sustainable growth, a balanced increase in both credible issuers and investor base is essential to avoid overvaluation risks and foster genuine economic development.