Thursday, April 29, 2021 / 12:05 PM / by SEC Nigeria / Header Image Credit: Ecographics
Following an Institutional Capacity Assessment undertaken on SEC Nigeria in 2019, SEC Nigeria with the support of FSD Africa wishes to engage a consultant to develop an Information Communication and Technology (ICT) Transformation Strategy for SEC Nigeria.
Information and Communication Technology (ICT) plays a critical role in securities market supervision and development - both internally and externally facing. A properly functioning ICT can improve the efficiency and reduce regulatory costs to market intermediaries, issuers and investors particularly in in the approval processes and filings. It can also support the regulator in supervising the conduct of business.
The ICT transformation is expected to address the foundational issues related to SEC Nigeria ICT systems and technology readiness and capacity such as governance & Management, ICT Architecture & Systems, Information Security and Business Continuity amongst others. The transformation is expected to conform to international best practice and position SEC Nigeria as a modern technologically driven regulator that harnesses technology to deliver optimum services while also enabling market stakeholders to deliver better market performance for investors and issuers.
The project will support SEC Nigeria in mapping out appropriate Regulatory and Supervisory Technology approaches and defining the software and hardware specifications/requirements needed to optimize operations at SEC.
The transformation is expected to be a foundational enabler for the emergence of a transformed capital market regulator for Nigeria with the following impact/outcomes;
The consultancy is expected to commence in May 2021.
2. Project Background
2.1. Securities and Exchange Commission of Nigeria
The Securities and Exchange Commission (SEC), Nigeria is the apex regulatory institution of the Nigerian capital market supervised by the Federal Ministry of Finance.
The Commission has evolved over time having started with the establishment of the Capital Issues Committee in 1962 by the government as an essential arm of the Central Bank of Nigeria. This was purely an ad-hoc, non-statutory committee, which later metamorphosed into SEC in 1979, following a comprehensive review of the Nigerian financial system, with the promulgation of SEC Decree No. 71 of 1979. Successive reviews of this earlier enactment led to the introduction of a new legislation, the Investments 2 and Securities Act (ISA) No 45 of 1999. The ISA No. 45 of 1999 was repealed with the promulgation of the ISA No. 25 of 2007, which gives the Commission its current power.
This legislation further enlarged the powers of the Nigerian SEC, while saddling it with the dual responsibilities of:
The Act also empowers the Commission with a board of nine (9) members including the Chairman, the Director-General, three Executive Commissioners, two Non-Executive Commissioners, Representatives of the Federal Ministry of Finance and Central Bank of Nigeria.1 The SEC has approved and licensed various market operators in the Nigerian Capital Markets including; 6 Self-Regulating Organizations i.e. Nigerian Exchange Group, FMDQ Securities Exchange, the National Association of Securities Dealers, the Nigerian Commodities Exchange (NCX), Afex Commodities Exchange and the Lagos Commodities and Futures Exchange. Other capital market operators include; the Central Securities Clearing System (CSCS) which performs settlement, clearing and depository functions, 110 issuing houses, over 227 stockbrokers, 26 company registrars and 162 fund and Portfolio Managers.
2.2. About FSD Africa
We work to reduce poverty by strengthening Africa's financial markets. Established in 2012 and supported by UK aid, FSD Africa is a specialist development agency working to build and strengthen financial markets across sub-Saharan Africa. We work to reduce poverty through a 'market systems development' approach, which means we aim to address the structural, underlying causes of poverty by improving how financial market systems function.
We believe that investing in building a financial system that is transparent, stable and accessible creates the conditions for a fair and sustainable future, where inequality is reduced, corruption is tackled, and where individuals, businesses and governments alike are able to prepare for future challenges, from climate change to political instability.
From our headquarters in Nairobi, our team of financial sector experts work alongside governments, business leaders, regulators and policymakers to design and build ambitious programmes that make financial markets work better for everyone. Depending on the project, we can provide a combination of grants, investment capital, market insights or technical assistance to ensure we achieve our objectives.
We focus our work where the need is greatest, and where we believe the potential for impact is the most significant. We have a specific mandate to invest in breakthrough, innovative ideas that we believe can have a transformative impact. By sharing risk with our partners, we're able to address more difficult, persistent, or higher-risk challenges, in more unstable or fragile geographies, than traditional development finance organisations.
2.3. SEC Nigeria Institutional Capacity Assessment
In 2019, FSD Africa commissioned International Securities Consultancy Limited (ISC) to undertake an institutional capacity assessment (ICA) of SEC Nigeria. The aim was to determine if SEC Nigeria had the requisite capacity to undertake its twin mandate of market regulation and development. The assessment involved looking into the current internal structure and identifying areas of strength and improvement considering leading best practices and peer comparisons. The assessment looked at regime and governance, financial management & internal controls, systems and administration, human resources, organizational management and programme management. The ICA report identified ICT as one of the critical areas for institutional capacity strengthening to improve delivery of the regulatory/supervisory and market development mandate of SEC Nigeria.
3. Objectives and Scope
The main objective of the exercise is to work with SEC Nigeria to develop a digital transformation strategy that will provide clear roadmap for improvement of regulatory capacity of SEC through modernization and transformation of its ICT systems and infrastructure.
Specific objectives include, working with SEC Nigeria in:
3.2. Scope of work
The Consultant will be required to engage in the following activities, with other closely related areas if they emerge during the course of the assignment:
i) Undertake a review of ICT infrastructure, systems and processes at SEC Nigeria and propose solutions that will encompass the set of initiatives under the ICT Transformation Strategy (note that a preliminary assessment has been done and reports available for review), this will include but not limited to;
ii) Review in detail the Institutional Capacity Assessment report undertaken on SEC Nigeria in 2019 to appreciate the challenges, risks and recommendations identified with regards to ICT and how they relate to the operations of the organisation in general.
iii) Stakeholder interviews: in-depth, structured interviews with key stakeholders. Through the stakeholder engagements it will be important to gain a good understanding of the challenges they have experienced with regard to the existing ICT system and process and where improvements can be made.
iv) Develop a diagnostic report informed by the comprehensive review which includes an in-depth stakeholder engagement (emerged consultant may need to conduct further engagements where gaps exist).
v) Development of an ICT Systems and Infrastructure best practice report highlighting available Capital Market ICT solutions that conform to international best practices. The report will highlight the advantages and disadvantages of such systems and their agility and adaptability to digital evolution and other dynamic trends in the market. The report will also highlight the ability such systems to regulate markets in the context of remote working arrangements as witnessed during the COVID 19 pandemics. The report will include specific recommendations on systems and infrastructure that best fit the Nigerian context.
vi) Consultative seminars/workshops: Broad stakeholder support for the process is an absolute necessity to ensure success of the project. In addition, stakeholder engagement on the transformation process can be leveraged to engender more awareness on the importance of robust ICT/Digital systems and processes in capital markets. Bidding consultants will be called upon to suggest strategies to build inclusive momentum for Transformation Strategy: these might include one-on-one meetings and small engagement meetings targeted at specific groups of stakeholders who could "champion" the Transformation Strategy. The Consultant would be expected to both conceptualise and facilitate these.
vii) Agree with SEC and other relevant stakeholders on the outline, content and results for the ICT Transformation Strategy.
viii) Production of the ICT Transformation Strategy itself in working draft form.
ix) Production of a detailed draft implementation plan for the ICT Transformation Strategy, in a separate document to the ICT Transformation Strategy itself, detailing:
x) Market consultations on the draft ICT Transformation Strategy and the implementation plan, to validate the report and confirm timing of implementation, roles and responsibilities, financing of implementation, monitoring and risks.
xi) Finalization of the ICT Transformation Strategy. The consultant will be required to produce an international standard final product benchmarked against international best practice including TOGAF, COBIT, ITIL and others.
xii) Draft Terms of reference for the consulting firm (s) that will implement the various initiatives under the ICT Transformation Strategy. xiii)Draft Capacity building plan in support of the ICT transformation strategy.
The deliverables under the assignment are as follows: