By Seun Ibiyemi
The Securities and Exchange Commission (SEC) has proposed a minimum capital requirement of N10 billion for Credit Enhancement Service Providers (CESPs) in Nigeria, under draft rules aimed at strengthening market stability, protecting investors, and unlocking funds for infrastructure financing.
According to the rules, providers that fall short of the threshold will be barred from issuing additional credit enhancement facilities until recapitalisation is achieved and a recovery plan acceptable to the Commission is submitted.
CESPs, such as InfraCredit, provide financial guarantees that improve the credit quality of debt instruments, making them more attractive to institutional investors like pension funds and insurers. The SEC said the entities are vital in bridging Nigeria’s infrastructure financing gap by boosting investor confidence in long term projects.
The draft rules also prohibit credit enhancement providers from declaring dividends until preliminary expenses are cleared, provisions for losses made, and prudential requirements fully met. They must also maintain up to 85% of assets in liquid form, establish robust risk management systems, and comply with International Financial Reporting Standards (IFRS).
Commercial banks and insurance companies licensed by the CBN and NAICOM will be deemed compliant once they submit a letter of good standing from their regulators, but must renew compliance annually within 45 days of the financial year end.
The SEC said the proposed framework reflects its ongoing push to deepen Nigeria’s capital markets, enhance investor protection, and attract long term financing for critical projects.