BY KENNETH EZE
The Federal Government has been advised to take advantage of the Nigerian capital market to fund deficits in the 2022 Appropriations Bill.
The Association of Capital Market Academics of Nigeria, offering the advice in Abuja, pointed out that while the government eyed borrowing to bridge the N6 trillion deficit in the 2022 budget proposal, future loans should be tied to self-liquidating projects in view of the present debt service burden.
The President of ACMAN, Prof. Uche Uwaleke, said, “A revenue bond is self-financing. If we issue revenue bonds, we would not be bothered about debt service burden because you are not going to touch any money to service but use revenue coming from that project to service the debt.
“So, it’s left to the government to identify those viable projects that they need to fund and approach the capital market for the funds.”
Uwaleke observed that infrastructure financing would continue to pose a major challenge to the government unless the private sector was brought in to actively participate.
On the financing schemes proposed in the budget like the Public Private Partnerships and Sovereign Green Bonds programme, the ACMAN counselled the Federal Government to use revenue bonds and take advantage of the benefits of asset securitization.
“We recognise that part of the 2022 fiscal deficit will be financed through privatisation proceeds. However, the amount involved is not significant.
“The government is advised to identify more suitable assets for partial privatisation and execute the process through the capital market.
“In this regard, we welcome the plan by the government to partially privatise the newly incorporated NNPC Limited through the Nigerian Exchange,” Uwaleke added.
The association noted that the Nigerian stock market outperformed global stock markets in 2020, due to the low interest rate environment engendered by the Central Bank of Nigeria.
“We urge the CBN to continue its accommodative monetary policy stance which has had a salutary effect on the stock market while at the same time tackling the supply-side induced inflation including through targeted interventions,” the ACMAN president said.
While commending President Muhammadu Buhari for presenting the Appropriation Bills 2022 in timely manner, he said, “It goes without saying that the Nigerian capital market presents various untapped opportunities. Therefore, integrating the Nigerian Capital Market Master Plan into the country’s 2021 – 2025 National Development Plan will position Nigeria for sustainable economic growth and development.”
Observing that the early presentation of the budget showed that the Federal Government was willing to return to the January to December cycle of budgeting, be said, “The ball is now in the court of the National Assembly to speedily consider and pass the Bill so that implementation can commence as expected in January.”
