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It was the toughest statement out of the financial system regulators in Nigeria this week. Yes, Nigeria’s Securities and Exchange Commission (SEC) nearly made the startups which are helping Nigerians to buy foreign stocks illegal. When I read the notice, I did not want to write about it because, by nature, I do not like to break news; I like to analyse broken news. For this one specifically, the risk was huge: doing it without a nuanced analysis could make some people do the unthinkable in a nation under stress.

In a statement Thursday, the regulator said those securities were not registered in Nigeria, and platforms providing access to them were acting against the law. It warned capital market operators in partnership with the platforms to desist from providing brokerage services for foreign securities.

The apparent move by the SEC to bar fintechs from selling, issuing or offering for sale foreign securities not listed on any exchange registered in Nigeria, if seen through, will negatively impact thousands of Nigerians who have lately been drawn by technology to investing in foreign securities.

I recall that Nigeria is bombing Akwa Ibom and making many of the citizens aliens, when the evils the bad boys have committed are done in the Southeast and the northern part all the time. Sure, no one is giving excuses for fighting bad boys but the asymmetric force used when it comes to Nigerian minority tribes should be re-evaluated. You want to flush our miscreants and within days you have created refugees in a largely peaceful region of the nation. Can we do this in Kano? Kaduna? Ekiti and Enugu? Not possible! From Odi to its cousins, since 1970, all the hard hits have typical geographies.

The military operation in Essien Udim Local Government Area of Akwa Ibom State to “flush out miscreants” has created a new challenge – a refugee crisis – in the state.

The operation was launched in Ntak Ikot Akpan community after some hoodlums attacked and killed three police officers in the local government area a few days ago.

Four officers are still missing after the attack, the police in Akwa Ibom said.

Several people were killed during ground operation and an aerial bombardment by troops.

Back to the apps. The SEC notice should concern those investment apps which focus on foreign stock markets, helping Nigerian investors to buy Apple, Facebook and other foreign stocks. Sure, many of them would move to comply but this is a concern after what happened to cryptocurrency when the apex bank banned its connection to the Nigerian banking. Chaka, Trove, Bamboo, Risevest and others have works to do, because as they become more successful, regulations will evolve.

The SEC statement….

The attention of the Securities and Exchange Commission (the Commission) has been drawn to the existence of several providers of online investment and trading platforms which purportedly facilitate direct access of the investing public in the Federal Republic of Nigeria to securities of foreign Companies listed on Securities Exchanges registered in other jurisdictions. These platforms also claim to be operating in partnership with Capital Market operators (CMOs) registered with the Commission.

The Commission categorically states that by the provisions of Sections 67-70 of the Investments and Securities Act (ISA), 2007 and Rules 414 & 415 of the SEC Rules and Regulations, only foreign securities listed on any Exchange registered in Nigeria may be issued, sold or offered for sale or subscription to the Nigerian public. Accordingly, CMOs who work in concert with the referenced online platforms are hereby notified of the Commission’s position and advised to desist henceforth.

The Commission enjoins the investing public to seek clarification as may be required via its established channels of communication on investment products advertised through conventional or online mediums.

Signed
Management

The Central Bank of Nigeria has frozen fintechs from using BVN (bank verification number) to validate and authenticate their users. That should not be a problem if the National Identity Management Commission (NIMC)’s NIN (national identity number) has gone mainstream. Yet, what the apex bank did is a good call because if indeed NIN is working, even BVN has to be discontinued. Companies must try to add the NIN field as quickly as possible. 

“We’ve recently been made aware of a regulatory directive from the primary custodian of Nigeria’s BVN service to all their partners to suspend the provision of the BVN validation service to their third-party partners. This directive affects every non-bank in Nigeria that offers BVN Validation services. In light of this news, we’re hereby informing you that the BVN Resolve service will be temporarily unavailable starting at midnight, April 8, 2021.”

Of course, the concern remains: if fintechs cannot use the most trusted tool in Nigeria to validate users, the implication is that no fintech can live without a bank-cousin, thereby making sure the “challenger” can only be challenging and never will be in a position of dominance! I do hope that the apex bank is not making such calls here.

All images from Nairemetrics