By Obas Esiedesa
THE Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, has urged 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.
Mrs. Ahmed spoke on Thursday the Securities and Exchange Commission’s yearly Budget Seminar with the theme: ‘Financing Nigeria’s Budget and Infrastructure Deficits through the Capital Market’.
The Minister at the virtual seminar said the capital market provided the government an opportunity to raise funds during the trying periods of last year when the economy was shutdown following the outbreak of Covid-19 pandemic.
Past experiences have shown that the Nigerian capital market has been quite supportive in providing the necessary funds needed to finance government’s needs, she stated.
She explains: “The capital market is a room for various programmes and mechanisms that are 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 as apt given the urgency to raise infrastructure that are required for creating enabling 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 percent resulting in Nigeria pulling out of recession after two quarters of negative growth. This annual growth rate that was initially projected at -3.2 percent closed the year at -1.92 percent which is an improvement over most of the countries within our comparative groups.
Earlier, Director General of the SEC, Mr. Lamido Yuguda said that the 2021 Budget proposes a deficit of N5.6 trillion, with 42 percent of this to be financed using domestic sources.
Yuguda noted that 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.
“The 2021 Budget proposes a deficit of N5.6trn, 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”.
Participants in their resolution at the seminar urged the Federal Government to focus on raising bonds from the capital market as a means to financing revenue generating projects while working to reduce balance sheet borrowing.
They agreed that the government remains an enabler to creating the conducive enabling environment for policies, security and good leadership that will ultimately support business growth and development.
They therefore urged the Federal Government to prioritise funding of sectors such as security, education and health while creating an enabling environment for the private sector to fund sectors such as power, transportation and telecoms.
They also agreed on the need to develop an investment framework including an enabling legal and regulatory environment which represents contracts and compensates investors when necessary. This they posited is to ensure that there is a viable and attractive investment environment to attract and retain investors
“There is need for strategic collaboration between the public and private sectors for flexible, accessibility of funds through the capital market to finance infrastructure
“The development of infrastructure in Nigeria has primarily been through the traditional forms of contract awards by the government, through budgetary allocation. Private sector involvement is key, and the Federal Government has identified the power and transport sectors as key for overall development. Hence prime candidates for Public, Private Partnership.
“The success of PPP projects lies in creating an enabling environment for both private and public sectors. The public sector needs to prepare well-structured and bankable PPP to attract private investments while safeguarding public investments”, they added.