BY OLUSHOLA BELLO,
Operators have implored the federal government to utilise the Capital Market in funding the 2021 budget.
The proposed budget of N13.08 trillion for the 2021 fiscal year tagged ‘Budget of Economic Recovery and Resilience’ was pre- sented to the National Assembly by President Muhammadu Buhari on October 8, 2020.
The 2021 budget, which represents an increase of 27 per cent from the approved N10.3 trillion budget for 2020, is expected to accelerate the pace of economic recovery, promote economic diversification, enhance competitiveness and ensure social inclusion.
Federal and state governments
had on several occasions raised capital through the market to fund development projects.
Recently, the federal government raised N200billion through its Sukuk I and II to fund over 26 roads across the
six geopolitical zones in the country.
Nigeria, the largest country in Africa by population, is battling with myriad of economic challenges.
Its ability to realise optimal economic potentials is constrained by structural issues, including inadequate
infrastructure, limited foreign exchange capacity, trade barriers, growing unem- ployment, investor apathy, spiraling in- flation and other macroeconomic vagaries.
Government’s penchant for borrowing to finance budget deficit has consistent- ly drawn the ire of economic experts who often express concerns on the implicati- ons of debt burden on the nation’s mo- netary policy.
Recently, Vice President Yemi Osinbajo said government was seeking alternative avenues for money, which will attract indigenous and foreign finance and investment experts, top level government functionaries, capital market regulators, investors and other members of the capi- tal market ecosystem.
Speaking on the forth coming 2020 annual conference of Stockbrokers, with the theme, ‘Navigating through the Storms- Reenergizing the Economy through the Capital Market’, the president of Chartered Institute of Stockbrokers (CIS), Olatunde Amolegbe, said, “The significance of this year’s theme is better appreciated against the back- drop of the current situation where by the federal government is in dire need of fund to finance the economy. The key messages to the government and companies in Nigeria are that of hope and renewal by taking advantage of opportunities to source long term fund through the capital market.
“The federal government should access medium and long-term fund from the market to finance budget deficit and build infrastructure among others. Companies should also explore the market to shore up working capital, invest in Information and grow business, enhance profitability and boost return on investment (ROI).”
Corroborating him, the registrar and chief executive of CIS, Mr Adedeji Ajadi, noted that the COVID-19 pandemic had necessitated the need for comprehensive turnaround of Nigeria’s economy.
“We are sending a poser to the government: With the challenges of COVID-19, a looming recession and other economic issues in Nigeria, how do we turn our economy around? We are suggesting that, if well- explored, the capital market can be a major catalyst to drive the desired growth, and take us through the ‘storm,” he stressed.
Also, managing director of High- cap Securities, David Adonri, said the capital market is where fund users (government and corporate enterprises) source long- term (capital) funds, saying that it is an important mechanism for sharing the wealth of society.
According to Adonri, from the capital formation perspective, the capital market had been instrumental to the economic development of Nigeria, adding that it facilitates economic growth and mobilises savings from numerous economic units such as government, individuals and insti-
tutional investors for users like governments and private enterprises.
On his part, managing director of Sofunix Communications and Investment Limited, Mr Sola Oni said, “Government should begin to look inward, especially the capital market. The market has absorptive capacity to generate huge amount of fund with multipli- er effect of deepening the market. The time is now.”
The chief operating officer of InvestData Consulting Limited also pointed out that the government budget always affected the economy, while the economy in turn would affect the capital market.
He said, “The capital market is very important in funding for a lot of projects in the economy. The capital market is important in raising the money to fund the budget. We believe there are a lot of opportunities for the capital market in this budget.
There is a need for us to sit down again as a capital market community find ways of driving the budget.”
Also, recently, minister for finance, budget and national planning, Zainab Ahmed, identified the importance of the capital market to Nigeria’s economic growth, saying the importance of the capital market to Nigeria’s economic growth cannot be overemphasized.
She said, “We want a vision for a future Nigeria where the majority of Nigerians have been sustainably lifted out of poverty and have access to fundamental services including education, health care, water supply and sanitation; a future where all are financially included, with affordable access to financial products and services; a future where we have left no one behind.
“Our capital market is crucial to actualizing this future and to achieving the sustained, inclusive and equitable socio-economic growth that this government aims to achieve.”