Experts urge assets privatisation, securitisation to finance budget deficit
12 February 2021 |
3:00 am
The Federal Government has been urged to finance its N5.2 trillion budget deficit through privatisation of moribund assets and securitisation through conversion to marketable instruments.
The Federal Government has been urged to finance its N5.2 trillion budget deficit through privatisation of moribund assets and securitisation through conversion to marketable instruments.
At the Chartered Institute of Stockbrokers (CIS) Economic Review for 2020 and 2021 Outlook Webinar, a professor at the Finance and Capital Market Department of Nasarawa State University, Keffi, Uche Uwaleke, said government needs to privatize key assets especially the Nigerian National Petroleum Corporation (NNPC), and subsequently list it on the stock exchange.
He argued that the planned increase in Value Added Tax (VAT), reduction of waivers, and other measures were not sufficient to generate the amount of revenue needed to fund the yearly deficit in Nigeria.
According to him, the securitisation of government receivables would also go a long way to fund the nation’s infrastructure deficit.
Securitisation is the conversion of an asset, especially a loan, into marketable securities, typically for the purpose of raising cash by selling them to other investors.
He said: “Securitisation has been embraced by many countries to fund infrastructure. Government receivables can be used for housing projects and road construction and subsequently setting up special purpose vehicles that would take up the bonds and issue securitization in the market.”
He urged the government to issue infrastructure/revenue bonds/project-tied bonds to ensure that the proceeds are ring-fenced, as opposed to the current resort to general obligations bonds, which proceeds often go into recurrent spending.
To achieve this, Uwalake advised government to mandate its agencies to issue infrastructure bonds as obtainable in other emerging economies.
“Infrastructure bonds should be the focus presently; it constitutes only 2.5 per cent. We should scale up infrastructure bonds because we do not divert this money. Agencies of government issue bonds in other countries, our agencies should also issue infrastructure bonds guaranteed by the government,” he said.
Also speaking, the Chief Executive Officer, Adedipe and Associates, Biodun Adedipe, said there is need to privatise the Nigerian Commodities Exchange (NCX).
According to him, the Central Bank of Nigeria (CBN) is also expected to provide funds to strengthen other commodities exchanges to serve as platforms where commodities of various types would be traded.
He said this would complement the successes recorded in agriculture, and ultimately boost the manufacturing sector.
“Private sector is in a better position to manage exchanges. The NCX has been having a number of challenges since it was set up. It has been inactive due to funding and infrastructure issues.
“If we privatize these exchanges, it will complement what is happening in the agricultural sector and link to manufacturing. If we achieve this and make them move as other international exchanges, we will see great things happening in Nigeria,” he said.
Related
1 day ago
Stakeholders in the insurance and pension industry have called on operators in the sectors to adopt artificial intelligence (AI) to drive business expansion in the country.
1 day ago
Though it does not have the power to regulate prices, the Federal Competition and Consumer Protection Commission (FCCPC) will deploy an existing legal framework to enforce fair competition and consumer protection provisions to achieve fair prices of commodities.
1 day ago
Inflation in Nigeria is reaching its peak now and will decelerate toward the middle of the year, Director-General of the Budget Office of the Federation, Ben Akabueze, has said.
1 day ago
The International Renewable Energy Agency (IRENA) is seeking a new approach to energy security amidst geopolitical concerns and a push from fossil fuels.
1 day ago
The International Agro Original Equipment Manufacturers (OEM) has called for the exemption of all agriculture equipment from all forms of taxes, import duties, Value Added Tax and other levies for at least two years to enable Nigeria to become self-sufficient in food production.
1 day ago
Wema Bank has launched an anti-fraud campaign to protect its customers and other Nigerians against fraudulent activities perpetrated by some wallet accounts and fintech partners.
2 days ago
The Federal Government has called on oil and gas operators to create ingenious ways of raising capital to expand their investment and tackle myriads of problems facing the sector, especially leveraging the nation's capital market.
2 days ago
Publisher, The Guardian Newspapers Ltd, Lady Maiden Alex-Ibru, has called on the government at all levels in the country to remove obstacles besetting the paper industry, to prevent it from total collapse.
2 days ago
Nigeria’s economy is projected to grow to 3.3 per cent this year, while it may recede to 3.0 per cent in 2025. In its latest World Economic Outlook report, ‘Steady but slow: Resilience amid divergence,’ the International Monetary Fund...
2 days ago
Some 12,948 startups have so far been registered through the Nigeria Startup Act. The National Information Technology Development Agency (NITDA), which disclosed this, said they were registered for labeling.
×
Get the latest news delivered straight to your inbox every day of the week. Stay informed with the Guardian’s leading coverage of Nigerian and world news, business, technology and sports.
0 Comments
We will review and take appropriate action.