Stakeholder Seeks For Securitisation Of Public Assets To Boost Domestic Capital Formation

The CEO of Economic Associates, Dr. Ayo Teriba has called on the federal government to securitise public assets to unlock liquidity and boost domestic capital formation.

He stated this at the 13th annual conference of the Institute of Capital Market Registrars (ICMR) held in Lagos.

Securitisation is a process that involves pooling assets and selling securities backed by those assets to investors. It can help banks increase liquidity by transforming illiquid assets into marketable securities.

Teriba said that the country would continue to witness revenue shortfalls and liquidity shortage unless the government securitised all public assets through the capital market.

Teriba said unlocking the value of assets and enterprises through the capital market would not only attract more Foreign Direct Investment (FDI) into the country but would also stabilise the economy.

He noted the federal government currently holds more than 90 percent of outstanding money market and bond market instruments but has none of its enterprises listed in the nation’s stock market, despite an extensive list of securitisable corporate, real estate, and infrastructure assets.

He explained that the only way to strengthen the naira and ensure stability of the exchange rate is to achieve foreign reserve adequacy through harnessing the potentials in asset securitization.

President/chairman of Council, ICMR, Mr. Oluseyi Owoturo stated that the conference highlighted the importance of the capital market for providing funding for businesses and government, and how this funding is crucial for innovation, job creation and economic development.

He added that the conference showcased economic impact, how efficient capital markets contribute to the overall health of the economy by ensuring liquidity, reducing the cost of capital and promoting financial stability.

Also, the CEO of Nigerian Exchange Limited, Jude Chiemeka said that the Nigerian Capital Market has grown steadily, contributing to economic development by enabling businesses and individuals to access capital and investment products.

According to Chiemeka, the ongoing bank recapitalisation exercise showcases the market’s role as a reliable funding source, enhancing banking sector stability and signalling market maturity.

He noted that the participation of local retail investors in the capital market is still low, saying that looking at the number of people that have Bank Verification Number (BVN), which is about 70 million, we should assume that the number of the population investing in the market should be significant.

He said that the Securities & Exchange Commission (SEC) has a target of five million retail investors by 2025 even at that, it is still a small figure when compared to the number of people that have BVN.

He added that there is a need to grow investors’ confidence in the market, saying that “as essential partners in the market ecosystem, registrars work alongside regulators and market operators to uphold best practices. This collective effort builds a stable, dependable environment, attracting both local and international investors and promoting market growth.”