Nigeria’s vice president canvasses domestic savings, foreign capital to bridge infrastructural deficits

By Omobayo Azeez with Agency report Vice President Yemi Osinbajo of Nigeria Thursday canvassed the mobilisation of domestic savings and foreign capital for the funds urgently needed to bridge the infrastructural gaps in the country. In a keynote address, he presented at the 2019 FMDQ Nigerian Capital Markets Conference in Lagos, Osinbajo said those funds will also help to solve problems in agriculture, housing, SMEs and other services. He acknowledges that Nigeria required more capital to grow, develop and attain its potentials at the conference which had the theme, “Nigeria: A compelling destination of capital”. “We need to mobilise domestic savings and capital as well as attract the necessary foreign capital to finance our needs in the areas of infrastructure, agriculture, mining, industry, housing, SMEs,” Osinbajo said. Osinbajo’s keynote was delivered on his behalf by Mary Uduk, acting the director-general of the Securities and Exchange Commission (SEC), and he also identified information and communication technology, transportation and other services as other sectors where such development was needed. Nigeria needed to mobilise more funds to address its needs, the vice president maintained, noting that an African Development Bank report on Nigeria’s infrastructure plan in 2013 estimated that Nigeria would need to invest about $350 billion in 10 years to meet up with its peers. The vice president said that the administration of President Muhammadu Buhari was doing everything possible to close the gap in infrastructure deficit. He explained that this was being done through direct expenditure and also by incentives are given to private investors, domestic and foreign, to invest in the critical sectors of the economy. “The Economic Recovery and Growth Plan (ERGP) (2017-2020) has a major objective of building a globally competitive economy through investment in infrastructure, improvement in business environment and promotion of digital-led growth. “No doubt, this objective requires fresh and adequate capital,” Osinbajo said. According to him, the need to attract capital is further underscored by the ERGP’s initiatives such as the promotion of innovation and technology-led industries, encouragement of private equity and venture capital players. He stated that the government had also issued green, infrastructure and diaspora bonds to sustain finance. “Between February 2017 and November 2018, we have explored the international market to raise capital by issuing a series of Eurobonds and a Diaspora bond in June 2017,” he said, adding that this approach to diversifying the country’s sources of capital has assisted in making Nigeria a destination of capital and further deepening her capital market. “Private issuers are also encouraged to issue these instruments, leaning on the success recorded by the Federal government. The secondary markets of some of these instruments are also getting more liquid as observed on the Exchanges,” said Osinbajo. The government had increased allocation to capital projects in the annual budget to boost infrastructure development, he said, noting, “For instance, we have been allocating, on the average, close to 30 percent of our expenditure to capital projects. We are proposing about 21 percent of the N10.33 trillion of the 2020 budget as capital expenditure.” Speaking on some of the government’s plan for 2020, Osinbajo said that the federal government would sustain growth and ensure the creation of more jobs in 2020 and carry out major reforms on Deep Offshore and Inland Basin Production Sharing Contract. Osinbajo also said that the government would leverage the private sector funding for capital projects through tax credit schemes, as well as modernise the national grid under the Presidential Power Initiative. He said that the administration would issue more licenses to build modern terminals in ports and continue to engage in innovative borrowing, using Sukuk, Green Bonds and Diaspora Bonds. “However, we recognise that government alone cannot muster and deploy enough resources that are necessary for Nigeria’s development, due to competing and rising needs as well as challenges in revenue sources and collection,” According to a monitored news agency report, Uduk said that the Capital Market Master Plan (2015-2025) was launched to transform the Nigerian capital market with a view to making it more competitive to enable it contribute its quota to developing the nation, through funds mobilisation. She said that the plan was hinged on four strategic themes: Contribution to National Economy, Competitiveness, Market Structure and Regulation and Oversight. Uduk said that SEC, in partnership with the market, had worked on initiatives that simplified the process of raising capital and reduced time to market in contributing to the national economy. “The recent efforts toward developing the Nigerian commodities ecosystem and the Fintech space are also important contributions to the Nigerian economy,” said Uduk, adding that in order to enhance market competitiveness, the minimum capital requirements for capital market operators were raised and transaction costs reduced for equities and a fixed-income segment of the market. Other areas she said were “a robust complaint management framework introduced and various other initiatives being implemented to enhance liquidity. Toward improving the market structure, minimum operating standards for all market operators have been implemented. “Some of the ongoing initiatives such as the e-dividend, multiple subscriptions, direct cash settlement and electronic distribution of companies’ annual reports are geared toward achieving an innovative market structure,” Uduk explained.