SEC tasks states on specific target projects to boost IGR

The Acting Director-General, Securities and Exchange Commission Nigeria (SEC), Ms Mary Uduk, has urged states government to establish specific target projects or companies capable of boosting their Internally Generated Revenue (IGR).

Uduk suggested that such projects could be in the areas of sugar cane, cocoa processing factory or other projects with income and export potential, which have the ability to generate revenue.

She noted that: “These companies, if set up as public companies with private sector participation, albeit with a majority of the shares owned by the state, can issue its securities to the public. This is to raise capital on ongoing basis to meet the working capital needs of the companies. Being set up as a public company confers the transparency and corporate governance standards, which foreign investors require.”

Uduk gave the advice in a message at the ongoing Federation Account Allocation Committee (FAAC) 2020 Retreat, in Lagos, themed,
“Efficient Federation Revenue Allocation as a Nexus for National Economic Diversification.”

Recall that over the years, some state governments have issued sub-national bonds to finance infrastructure projects, even as the Federal Government also channels some of the proceeds of its general bond issuance towards financing infrastructure.

In a statement from the Commission, Uduk was quoted as saying that there is an urgent need for states government to increase their IGR to enable them meet their financial obligations to the people and carry out developmental projects.

According to her, the capitalm Market had been associated with the development of critical legacy projects across Nigeria, which includes development of the Kaduna Ginger Factory, Ogba Riverside Housing Estate in Edo as well as the Lekki Peninsula in Lagos, among others.

She explained that borrowing from the capital market is cheaper for states than conventional banks, which have higher interest rates and lesser repayment periods.

She further said some state governments were forced to shun the capital market in financing their projects due to the rigorous conditions put in place by SEC for obtaining and utilising the loans.

Uduk said during verifications by SEC, some of the projects for which the loans were sought were discovered to be non-existent, while others already existed before the applications were made.