Acting Director-General of the Securities and Exchange Commission (SEC), Ms. Mary Uduk, said at the weekend that an active infrastructure fund via the capital market as being pursued by capital market stakeholders would help close the nation’s infrastructure gaps.
In a key speech at the annual conference of the Capital Market Correspondents Association of Nigeria (CAMCAN) in Lagos, with the theme “Bridging Nigeria’s Infrastructure Gap: the capital market option,” Uduk said international capital markets are the deepest pool of financing globally and essentially remain an untapped source of funds for infrastructure projects.
Uduk, who was represented by the Head External Relations Department of the commission, Sufian Abdulkarim, said this pool can make a huge contribution to economic development if effective transaction structures are developed.
Uduk said the government cannot be the sole provider/promoter of infrastructure projects, adding that private sector investment in the infrastructure sector is also required.
According to her, “given the need to bridge the infrastructure deficit and the challenges of financing it, the county needs to leverage alternative sources of infrastructure financing, such as the capital market. In view of the government’s bid to reverse the current growth trend, diversify the economy and develop infrastructure, there is no better time than now to leverage the capital market for sourcing of infrastructure development financing.
“The capital market provides an enabling environment for private investments in infrastructure projects and the SEC is doing its part to foster this through the implementation of the Capital Market Master Plan (2015-2025). The plan’s major objective is to transform the Nigerian capital market, making it competitive, while contributing towards the nation’s development through funds mobilization.
“There are various sources of funds available in the capital market which can be harnessed for infrastructure development, some of which are Pension Funds, Real Estate Investment Trusts (REITs), Collective Investment Schemes (CIS) amongst others. In addition, there are various capital market instruments that can be used for infrastructure financing, amongst which are the infrastructure project bonds, Sukuk, infrastructure debt bonds, green bonds, and revenue bonds,” she stressed.
Various governments, she continued, have over the years issued sub-national bonds to finance infrastructure projects, adding that the Federal Government also channels proceeds of its general bond issuance to infrastructure financing. The government, she noted, has no dedicated infrastructure project bond yet.
This is changing, according to her, with the government issuing two sovereign Sukuk, consisting of N100bn each in 2017 and 2018 solely for infrastructure development, as well as two green bonds valued at N10.6bn and N15bn respectively in 2017 and 2019.
“Before then, the Osun state government had issued Sukuk in 2013 for the construction of schools. The major justification for Sukuk issuance in Nigeria is the need to close the vast infrastructure funding gaps across the country because it is asset-based or project-based. Other projects that Sukuk can be used include; Mass Housing, Road, Railway and Airport construction, Construction of Schools, hospitals, acquisition of meters for DISCOs, and equipment for generating companies amongst others” she added.
Caption: From left, Mrs. Isioma Lawal, Head, Internal Control Department, Central Securities Clearing System Plc, For Jude Chiemeke, Divisional Head, Trading Business at the Nigerian Stock Exchange (NSE); Okey Umeano, Head, Office of the Chief Economist, Securities and Exchange Commission (SEC); Sufian Abdulkarim, Head, External Relations at the commission; and Oluseun Olatidoye, Head, Debt Capital Markets at FBNQuest Merchant Bank Limited, who was guest speaker at the annual conference of the Capital Market Correspondents Association of Nigeria (CAMCAN) in Lagos, on Saturday in Lagos.