Financing the economy: Experts crave renewed strategies
08 April 2018 |
4:22 am
Expert the nation’s authority and its agencies evolve a framework that would ensure forbearance, credit information and social investment by financiers, the journey to fund critical infrastructure would remain a mirage.
Utomi
Expert the nation’s authority and its agencies evolve a framework that would ensure forbearance, credit information and social investment by financiers, the journey to fund critical infrastructure would remain a mirage.
The strategy would include risk-sharing framework for critical sectors’ investments, a strategic focus on the sectors to serve as catalysts to the nation’s growth quest and a consideration of portfolio restructuring.
Nigeria’s frontline financial experts and technocrats, who made the observations at the unveiling of The Guardian’s compendium titled: “Financing the Economy”, said banks must be made to attain their full potential for the economy, while evolving strategies to de-risk their lending.
From his perspective, Prof. Pat Utomi said we cannot be discussing financing the economy without evolving a strategy that will help the finance sector, even as he stressed that growing the economy required that the country must tap into the potentials of its population.
Utomi, who harped on evolving a strategy to move the economy forward, noted that before investors come in, the country should explore the capital that is inherent at home.
He said: “Capital is made at home and we need to build it. There is accumulation of capital on some peoples’ pockets. The issue is how we can make the economy attractive enough to ensure the funds are released,” he stated.
Utomi, who is the Chairman of Centre for Value Leadership, noted that the economy may continue to crawl, because of weak institutional arrangements, adding: “Financing the economy should not be left to the banks alone. In other climes, other sectors, such as the insurance industry, contributes massively to growing the economy.”
According to him, there was need for a strategy for development of banks and banking policies to be able to move the economy forward.The Managing Director of Financial Derivatives Limited, Bismarck Rewane, said to move the economy forward, Nigeria must stop doing “stupid things.”
Rewane said the topic: “Financing The Economy”, should have been a misnomer, if based on fact that the economy was really being financed.He was, however, quick to mention the need to increase output, employment, intervention and de-risk the banking sector for them to perform, lamenting that “those who have the authority have no ideas, while those with ideas lack the authority.Also, the Managing Director of Niger Delta Power Holding Company (NDPHC), Chiedu Ugbo, said power sector is critical to the economy.
Ugbo explained that the power sector was funded by the government, but there was a thought recently that the sector was better financed by the private sector, which was later considered.He lamented that they generate power, but that the Discos that should bring in the funds complained bitterly of tariffs and other challenges, adding that the private sector (banks) are not willing to come in, because to them, the power sector is not financeable.
While stating that the sector needs investment for critical infrastructure, especially in the areas of distribution, Ugbo said: “We need more investment to restructure the sector. The Federal Government is not folding its hand on investment. Nigeria needs more than 7000mw but we must come together to get this done. All hands must be on deck to move the economy forward.”
Former Chairman, National Electricity Regulatory Commission (NERC), Dr. Sam Amadi, said to attract funding to the power sector to achieve market viability, financing the private sector is critical.He identified the private sector involvement, the regulatory risk framework, and government funding as models that will finance the power sector effectively.
To guarantee and bring effectiveness to the sector, Amadi said the pricing system and market forces should be regulated, adding that government’s involvement in providing financial guarantee for the private sector in financing the sector is the solution for improved outcome.
“The plan for the power sector is that once you unbundle and privatise based on regulations, it will prompt private sector to come in and invest,” he said.He also canvassed crowd-sourcing method of financing the sector, where he recalled the method as being used to generate funding from the people of Imo State for the Imo State’s airport.
Using this method, he said, the citizens must have trust in the government for safe use of their monies, adding: “If the private sector is allowed to power the sector effectively, government must make a regulated investment, creating a will for sustainable financing for consumers. “We can’t rely on the private sector only to close the deal, because the risk cannot be managed properly.”
Earlier in his address titled: “The economy in simple language”, the Editor of The Guardian, Abraham Ogbodo, said Nigeria had done more spending than investment since its birth in 1960, where on the average, the capital side of budgets at both federal and state levels has fluctuated between 20 and 30 per cent
“In the past 19 years, between 70 and 80 per cent of N60tr has been spent by Nigeria to service its taste as Giant of Africa, while the remaining percentage has gone into building its capacity, as the real continental giant that it claims to be,” he said.
He noted that government was not the only player in the economy, as the entire public sector spending does not represent more than eight per cent of the country’s Gross Domestic Product (GDP).
Just like the brain is important to human anatomy, Ogbodo stressed that the government was responsible for creating the medium for economy’s survival.
“In operations, the private sector drives the economy, as well as, provide investments that create jobs and all the layers of multiplier that define a thriving economy”, he added.He called on financial institutions which are like the life blood of the economy to support both sectors to thrive, saying “Banks must step up advocacy on the various products and services to stimulate small and medium scale investments, bearing in mind that every economy runs on the backbone of SMEs,” he noted.
Ogbodo urged CBN not to relent in its effort to bring under control interest, exchange and inflation rates, saying, “incidentally, these three rates are also the instruments the CBN juggles upwardly, downwardly and horizontally to achieve price stabilisation in the economy,” he said.
Although what drives an economy is the volume of money making activities, The Editor urged regulators to apply the rules to ensure sanity, “they should not forget to make the investment climate conducive and competitive”.
Related
2 hours ago
The Nigerian National Petroleum Company Limited (NNPC Ltd) said it has resolved the cause of tightness that was experienced in the supply of fuel. NNPC disclosed this on Friday evening in a statement signed by spokesman, Olufemi Soneye in Abuja. "The Nigerian National Petroleum Company Limited (NNPC Ltd.) wishes to clarify that the tightness in…
5 hours ago
Wednesday, April 24, will ever remain memorable in the minds of residents, passersby, and business owners along Atiku Abubakar Avenue, Uyo, as it marked a major turning point in the gory history of the road and its environs, with the inauguration of projects by former President Goodluck Jonathan. Inaugurating the 1.3-kilometre, 8-metre-deep, 2x2x0.3-metre-deep underground flood…
9 hours ago
The Corps Marshal, Mr Dauda Biu, has hailed road marshals nationwide for their doggedness and sacrifices in checkmating routes violations thereby reducing road traffic accidents by 42 per cent.
11 hours ago
A fire incident disrupted flights at the Murtala Muhammed International Airport (MMIA), Lagos, on Thursday morning. The Federal Airports Authority of Nigeria (FAAN), in a statement on Thursday, said smoke was detected emanating from the E54 bridge at 05:29 hrs. FAAN's director of public affairs and consumer protection, Obiageli Orah, said the airport engineers immediately…
16 hours ago
As the whereabouts of former Kogi State governor, Yahaya Bello, remain unknown a week after he was declared wanted by the Economic and Financial Crimes Commission (EFCC) and placed on a watch-list by the Nigeria Immigration Service (NIS)
16 hours ago
President Bola Tinubu and President of the Senate, Godswill Akpabio, have promised to give fresh direction to the justice sector in the country through a holistic overhaul.
16 hours ago
Governor Babagana Zulum of Borno State has urged the Army to establish military formations in Sambisa Forest and the Mandara Hills, bordering Cameroon and Chad in the North East, to counter terrorism in the areas.
16 hours ago
Presidential candidate of the Labour Party (LP) in the 2023 general election, Peter Obi, has challenged privileged Nigerians to help in tackling water scarcity and provide Almajiri children access to Western education.
16 hours ago
The probe instituted by the Kaduna State House of Assembly against former Governor Nasir el-Rufai has begun, as the lawmakers directed the Ministry of Finance to supply documents relating to financial transactions between May 29, 2015 and 2023.
16 hours ago
A joint committee of the House of Representatives has summoned the Group Chief Executive Officer of Nigerian National Petroleum Company Limited (NNPCL), Mele Kyari, to appear before it on May 8 over a probe on environmental degradation caused by the activities of oil companies in oil-producing communities.
×
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.