FG Harps on Domestic Savings, Foreign Capital for Infrastructure Funding

Yemi Osinbajo

Goddy Egene

Vice President Yemi Osinbajo Thursday stressed the need to mobilise domestic savings and foreign capital to fund the nation’s infrastructure, housing, agriculture, Small and Medium Enterprises and other services.

Speaking at the 2019 FMDQ Nigerian Capital Markets Conference in Lagos, Osinbajo said Nigeria, as a country, required more capital to grow, develop and attain its potential.

He said: “We need to mobilise domestic savings and capital as well as attract the necessary foreign capital to finance our needs in the areas of infrastructure, agriculture, mining, industry, housing, SMEs, information and communication technology, transportation and other services.”

The Vice President, who was represented by the acting Director-General, Securities and Exchange Commission (SEC), Ms. Mary Uduk, said an African Development Bank report on Nigeria’s Infrastructure Plan in 2013, had estimated that the country would need to invest about $350 billion in 10 years on agriculture to meet up with its peers

According to Osinbajo, the administration of President Muhammadu Buhari was doing everything possible to close the gap in our infrastructure deficit.

“The Economic Recovery and Growth Plan (ERGP) (2017-2020) has a major objective of building a globally competitive economy through investment in infrastructure, improvement in business environment and promotion of digital-led growth. No doubt, this objective requires fresh and adequate capital,” he said.

According to him, the need to attract capital is further underscored by the ERGP’s initiatives such as the promotion of innovation and technology-led industries, encouragement of private equity and venture capital players.

Osinbajo said government had also issued green infrastructure and diaspora bonds to sustain infrastructure financing.

“Between February 2017 and November 2018, we have explored the international market to raise capital by issuing series of Eurobonds and a Diaspora bond in June, 2017.

“This approach to diversifying our sources of capital has assisted in making our country a destination for capital and further deepening our capital market.

“Private issuers are also encouraged to issue these instruments, leaning on the success recorded by the Federal Government.

“The secondary markets of some of these instruments are also getting more liquid as observed on the exchanges,” Osinbajo added.

He said that government had increased allocation to capital projects in annual budget to boost infrastructure development.

“For instance, we have been allocating, on the average, close to 30 per cent of our expenditure to capital projects.

“We are proposing about 21 per cent of the N10.33 trillion of the 2020 budget as capital expenditure,” he stated.

Speaking on some of government’s plan for 2020, Osinbajo said that the federal government would sustain growth and ensure creation of more jobs in 2020.

He noted that the government would conduct major reforms on Deep Offshore and Inland Basin Production Sharing Contract.

Osinbajo added that it would leverage the private sector funding for capital projects through tax credit schemes and modernise the National Grid under the Presidential Power Initiative.

He said that government would issue more licenses to build modern terminals in our ports and engage in innovative borrowing using Sukuk, Green Bonds and Diaspora Bonds.

“However, we recognise that government alone cannot muster and deploy enough resources that are necessary for Nigeria’s development due to competing and rising needs as well as challenges in revenue sources and collection,” he said.

Meanwhile, in her opening address, Uduk said that the Capital Market Master Plan (2015-2025) was launched to transform the Nigerian capital market, make it more competitive and repositioned to contribute its quota to national development through funds mobilisation.

She explained that the plan was hinged on four strategic themes, namely: contribution to national economy, competitiveness, market structure and regulation and oversight.

Uduk said that SEC, in partnership with the market, had worked on initiatives that simplified the process of raising capital.

“The recent efforts towards developing the Nigerian commodities ecosystem and the Fintech space are also important contributions to the Nigerian economy.

“In order to enhance market competitiveness, the minimum capital requirements for capital market operators were raised, transaction costs have been reduced for both equities and fixed income segment of the market while a robust complaint management framework was introduced and various other initiatives are being implemented to enhance liquidity.

“Towards improving the market structure, minimum operating standards for all market operators have been implemented.

“Some of the ongoing initiatives such as the e-dividend, multiple subscription, direct cash settlement and electronic distribution of companies’ annual reports are geared towards achieving an innovative market structure,” Uduk noted.