SEC faces liquidation, records N9bn deficit in 3yrs

…as Senate kicks against jumbo pay for top officers 

By Peter Usman

Security and Exchange Commission, SEC is presently being threatened by liquidation as the capital market regulator declared budget deficit of N8.5 billion in three years.

This was even as the Senate noted that the agency was treading the path of insolvency with its humongous personnel cost, especially the alleged jumbo pay to its top officers. 

Director General of SEC, Lamido Yuguda had yesterday revealed at an interactive session with members of 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. disclosed that the agency has been operating a deficit budget over the years.

In the document submitted to the joint committees, in 2019, the agency recorded N2.9 billion deficit while in 2020, it recorded deficit of N4.3 billion and as at June 2021 already recorded deficit of N1.7 billion.

Therefore, the total deficit between 2019-2021 is N9 billion.

Yuguda stated that from January to June 2021, the commission realized a revenue portfolio of N11.6 billion, while recording a total expenditure of N16.67 billion, leaving behind a balance of N5.17 billion.

He, however, explained that the situation was caused by the market meltdown and the global COVID-19 pandemic.

According to him, SEC is overburdened by a staff strength of 544, including pensions for retired officers and a personnel cost of N10.322 billion.

The director general stressed that since June 2020, the commission has been paying 25 per cent of its gross revenue of N 1.5 billion to the national treasury.

Yuguda, who claimed that SEC has an investment portfolio of N6 billion with the Treasury Single Account, TSA, including ownership of Government Treasury Bills, could however not provide explanations on the sources of the monies used by the commission to fund its budget deficit.

Shocked by deficit recorded by SEC, chairman of the Senate Committee on Finance, Senator Solomon Adeola (APC Lagos West), criticized the commission’s unsubstantiated budget remarks, while also condemning the director general’s

inability to provide proof showing how SEC funds the budget gap.

Senator Adeola noted that the personnel cost of the commission has been on the increase in the last three years. 

“This budget gives us a wrong impression about SEC. You are a regulator to businesses that are making money but you aren’t making money. You may need to look at how to regulate your personnel to generate money. You need to cut down on cost.

“Your personnel cost, your top profile takes about 70 percent of total emolument of N9 billion, only 30 percent bego to lower cadre.

“We should know what is happening. This is the second year you are coming with a deficit budget,” he stressed.

In his remarks, a member of the joint committees, Senator Kashim Shettima (APC Borno Central), frowned at the excuse by the SEC boss and urged him to think out of the box.

He said considering the record before the lawmakers, SEC was treading the path of insolvency with its humongous personnel cost.

“In the next two years, you are going to go bankrupt. Right now you are in deficit and  except you come up with solutions you are going to go insolvent and won’t be able to meet your needs.

“We are challenging you to go back to the drawing board and find solutions to your financial situation,” the former Borno State governor said.

Also contributing, Senator Adelere Oriolowo (PDPOsun West), implored Yuguda to expand the SEC’s scope of revenue generation amid what he called dwindling transactions on the floor of the stock exchange.

Another lawmaker, Senator Tokunbo Abiru (APC Lagos East), lamented that the returns generated by the commission “is way below its expenditures.”

He pointed out that “as a regulator to businesses making profit and you’re not making profit, it is a challenge.”

“In 2019, you have a deficit of N2.9 billion, 2020 you have N4.3 billion and the returns you are getting from these investment securities are way below what can fund it. So, it is either you are borrowing money somewhere to fund these operations which I honestly think is not the best thing to do.

“So, I think that part of what you should be thinking of is how do you right-size your operations within the limit of the revenue that you can generate,” he advised.

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