‘Benefits of leveraging capital market to fund long term projects’

THE Securities and Exchange Commission has stressed the need for the nation’s capital market to be leveraged for the provision of  funds needed to finance energy, transportation and social infrastructure projects, beyond the budget.

   The Acting Director General of the Commission,  Mounir Gwarzo submitted that in an era of fiscal constraints and increasingly stringent capital requirements on banks, attention must focus on capital markets to provide the funds needed to finance energy, transportation and social infrastructure projects, beyond the budget.

   Gwarzo, who urged capital market stakeholders to brainstorm on how and come up with clear, actionable ways in which the capital market could be better leveraged by o governments at both Federal and State levels to finance infrastructure.

   “I think beyond this year’s budget, the capital market must begin to assert itself as the most reliable medium for government to source for funds to finance critical infrastructure. Our infrastructure needs are too massive to be dependent on the meager yearly budgetary allocation. Infrastructure deficit has been estimated to cut about two percentage points from GDP growth annually in Nigeria. It is routinely identified as the most problematic factor to doing business in the country. 

   “The Nigeria Integrated Infrastructure Master Plan (NIIP) has revealed the extent of the deficit and the investment needs to close the gap, estimated at about USD3.9 trillion over the next 30 years. A similar study by the African Development Bank (AfDB) puts the needed investment at USD350 billion over 10 years. In an era of fiscal constraints and increasingly stringent capital requirements on banks attention must focus on capital markets to provide the funds needed to finance energy, transportation and social infrastructure projects, beyond the budget.

  “We must look beyond this to structure more innovative products including infrastructure bonds and securitization. To boost housing we must hasten the takeoff of mortgage-backed securities after the activities of the Mortgage Refinancing Company of Nigeria have led to a higher housing stock.

“  In essence, the challenge is a daunting one but not beyond the caliber of distinguished capital market stakeholders.I assure you of the SEC’s commitment to continually support all efforts aimed at developing the capital market and enabling it  to contribute more effectively to our country’s socioeconomic advancement,” he added.