The Securities & Exchange Commission, on Thursday, held the fourth edition of its annual budget seminar, with participants urging the Federal Government to focus spending of its scarce resources on priority sectors like security, education, and health.
Rising from a seminar with the theme “Financing Nigeria’s Budget and Infrastructure Deficits through the Capital Market” held virtually Thursday, participants urged government to issue bonds for financing the nation’s deficit of N5.6tr budget deficit for this year through the capital market.
Revenue from such bond issuance, they said can then be in revenue generating projects, while working to reduce balance sheet borrowing.
Setting the tone for the discussion, Director-General of the SEC, Lamido Yuguda, said “the 2021 Budget proposes a deficit of N5.6tr, and 42% of this will be financed using domestic sources. It is expected that the capital market will be leveraged to obtain this financing and also that the impact on infrastructure development of the country as well as the general economic conditions will be positive.
“In addition, we also believe that our capital market has the capacity to roll out innovative products to support Nigeria’s infrastructure needs and financing. This is necessary for us as a country to be able to effectively compete with the rest of the world”.
Yuguda expressed the belief that the capital market has the capacity to roll out innovative products to support Nigeria’s infrastructure needs and financing. This is necessary for us as a country to be able to effectively compete with the rest of the world.
It is against this backdrop, he continued, that the SEC has invited practitioners, policy makers and academics to analyse and discuss how the capital market can be leveraged to finance Nigeria’s budget and infrastructure deficits, drawing relevant policy lessons from successful jurisdictions.
“In the past four (4) editions of this Seminar, participants have benefited greatly from the insights provided by our speakers, guests and panellists. Usually, the communiqué from this meeting would be circulated to relevant public and private sector stakeholders as inputs into the national discourse on fiscal policy” he added.
According to participants at the one-day seminar, private sector players should be encouraged to fund such capital intensive sectors like power, transportation and telecoms, encouraged by appropriate Federal Government policies, leaving government more revenue to fund the social sectors.
Such policies, they explained will ensure provision of security and good leadership that will ultimately support business growth and development need for creating a conducive environment.
The participants also resolved that there is the need to develop an investment framework that encompasses legal and regulatory environment which represents contracts and compensates investors when necessary.
This they stressed the need for a viable and attractive investment environment to attract and retain investors, in addition to strategic collaboration between the public and private sectors for flexible, accessibility of funds through the capital market to finance infrastructure
Participants at the seminar also called for a shift from the traditional form of developing critical national infrastructure through budgetary allocations and contract by government, allowing for private sector involvement.
Sectors identified for overall development through Public, Private Partnership include the power and transport sectors, with the Federal Government creating the needed enabling environment for both the private and public sectors to collaborate.
To make this happen, they urged the public sector to prepare well-structured and bankable PPPs capable of attracting private investments, while safeguarding public investments.
In her remarks, Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, Minister said the Nigerian capital market has in the past been quite supportive, serving as an important channel through which government budget deficits and the economic infrastructure deficits are financed.
She expressed government’s commitment to introducing more of these instruments in partnership with the capital market to finance projects for economic growth, as “a room for various programmes and mechanisms targeted at aggregating and channelling long term capital for businesses and development.
“The Nigerian capital market has been doing this for many decades and has the potentials to do more. I want to urge the capital market participants and operators to consider retail investments to give opportunity to the Nigerian citizens to invest within the capital market in an easy and simple way.”
She described the theme of the seminar as apt, given the urgency to build infrastructure required for creating anenabling environment, in which businesses and citizens of the country can thrive.
“This need is further underscored by the current global pandemic with its attendant negative effects on our daily economic and social activities. In order to provide the necessary infrastructure and still continue to meet other immediate expenditure needs, government often adopts deficit budgets which have to be financed through borrowing.
“Nigeria needs to spend and spend now more on infrastructure and other capital projects. A recent evidence of the benefit of spending is the fourth quarter GDP growth rate of the economy which was 0.11% resulting in Nigeria pulling out of recession after two quarters of negative growth. This annual growth rate that was initially projected at -3.2% closed the year at -1.92% which is an improvement over most of the countries within our comparative groups,” she stressed.
Photo caption: From left, The CEO, Africa Finance Corporation, Samaila Zubairu; Executive Commissioner Corporate Services, Securities and Exchange Commission, Ibrahim Boyi; Director-General, Budget Office of the Federation, Ben Akabueze; CEO InfraCredit, Chinua Azubike; CEO Nigerian Stock Exchange, Oscar Onyema; and President, Association of Stockbroking Houses of Nigeria, Patrick Ezeagu; during the virtual seminar.
