Following the alarm raised by Senate that the Securities and Exchange Commission, SEC, is going insolvent over its continued operations on budget deficit, the commission has unveiled plans to reduce its operating costs in order to boost profitability within the next two years.
The Senate had last Wednesday expressed shock at the declaration of N9billion budget deficit in three years by the capital market regulator even as it frowned at the alleged jumbo pay to its top officers.
Director General of SEC, Lamido Yuguda, in a document submitted to the joint Senate Committees on Finance; National Planning; Foreign and Local Debt; Banking, Insurance, and other Financial Institutions; Petroleum Resources -Upstream, Down Stream and Gas, on the 2022-2024 Medium-Term Expenditure Framework, MTEF and Fiscal Strategy, FSP, revealed that the commission recorded N2.9 billion deficit in 2019 while in 2020, it recorded deficit of N4.3 billion and as at June 2021 already recorded deficit of N1.7 billion, totalling N9billion.
But Yuguda, in a statement issued yesterday and signed by the Head, Corporate Communications, Efe Ebelo, informed that the commission has been paying 25 per cent of gross revenues into the coffers of government.
Specifically, he said that the total revenue so far paid by SEC into the treasury as of the end of June 2021 was about N1.5billion.
While admitting that the commission has been operating under very difficult circumstances since it is currently superintending over a market that was affected by the negative impact of the corona virus pandemic, he assured that steps are being taken to reverse the fortunes of the apex regulator of the capital market.
He said: “If we go through the Medium-Term Expenditure Framework which we started last year, if we look at 2022 and 2023, you will see that we have worked on our expenditure so that by 2023, the deficit will actually turn into a surplus of N1.235bn and by 2024 we should have N2.5billion surplus.
“We therefore need the support of all to engineer the kind of transition we are thinking of at the SEC and that 30 per cent which is taking most of the staff cost is part of the set we are targeting for the early retirement programme.
“There is a lot of interest within the commission to do it but we are really short of the funds to do it now. We have done a lot of revenue rising drives just to ensure that the commission stays on track.
“This is something we are mindful of and we have the intent and capacity to deliver on this.
On the high overhead costs, the SEC boss explained that this is being reduced aggressively.
“It has reduced because we have since we came, aggressively looked at the overhead and staff cost and reduced certain components of our staff pay that has generated over N2bn of savings as at now.
“If you take the MTEF numbers, as you go forward, you find that by 2024 staff cost reduces to only N5.88bn. So that is the trajectory that we are working on,” Yuguda stressed.
To shore up the resources of SEC, he said the Commission has approached a number of institutions like the African Development Bank, Financial Sector Development Africa and a number of other donors.
This, he said, is expected to fetch a grant figure of N3.84billion, adding that more grant is being expected in the near term to boost operations.
He added: “The truth of the matter is that not only for the sake of cutting down on the cost of the SEC, when we came last year, we discovered there has been no IT investment in the SEC for over a decade.
“So, our IT infrastructure is now obsolete so we have to renew that. And given this difficulty, we could only do that by going out and looking for grant and thankfully we have gotten very positive feedback. But this grant is only going to address investment in IT infrastructure.
“We are working hard to ensure we deliver, from 2023 the tide will begin to change and that is because of the massive efforts that we have made both on the revenue front and on the cost front.”
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