By PETER EGWUATU
THE Federal government cannot finance the infrastructure needed to boost the economy by spending N4.99 trillion without leveraging the capital market, Director General, Securities and Exchange Commission (SEC), Ms Arunma Oteh has said.
The commission is also planning to come out with a financial inclusion strategy for the capital market inline with the Financial System Strategy 2020, just as it is working at developing an Islamic finance master plan for the Nigerian capital market.
Speaking after the Capital Market Committee (CMC) second quarter meeting in Lagos, weekend, Oteh said, “ The government should leverage the instrument of the capital market to finance the huge infrastructure needed to boost the economy.
Quoting a recent economics paper from Goldman Sachs which calculates that,in a sample of 12 African countries, total infrastructure demand over the next four decades will amount to $1trilion, of which Nigeria alone will need $360billion, Ms Oteh stated that the nation’s current budget of N4.9trillion could only achieve about 20 per cent if it is totally committed to fixing the nation’s infrastructural challenges alone.
“The concerns among the capital market community are that we should leverage on the instruments provided by the capital market to fix some of the important infrastructure in the country. We are going to have a securitisation roundtable with the all the ministers responsible for infrastructure provision” she added.
On the planned Islamic finance plan, Oteh stated that the commission is working at developing an Islamic Finance Master Plan for the Nigerian Capital Market.
According to the SEC boss, “The plan is that the CMC would work on this initiative and present them at a planned Capital Market Committee retreat scheduled to hold towards the end of the year. It is at that planned retreat that the SEC will endorse this with the view that they would begin operations starting in January 2014.”
She further said that the Islamic instrument would provide opportunity for Nigeria to finance some of the infrastructure needed to revolutionise the economy, adding that “we must be ready to build a world class capital market despite the challenges.
The SEC boss disclosed that the Board of the commission has approved a reorganization structure for the entity aimed at repositioning it for enhanced productivity.
In her words, “ The board has approved changes in the organizational structure of the Commission. The changes are intended to strengthen the SEC and position it to better discharge its mandates. They will better align the SEC to pursue its vision of becoming “one of the leading capital market regulators in the world”, and the Mission of developing and regulating “a capital market that is dynamic, fair, transparent and efficient enough to contribute to the nation’s economic development”.
Continuing, she said, “under the new changes, we have new departments, such as Office of the Chief Economist, Market Development, Strategy, Ethics, Procurement and Fixed Income. New Divisions were also created. They are: Litigation, Investor Protection, Investor Outreach, Call Centre, Non-interest Financial Products, Program Management Office, Statistics & Information Resource, Planning & Budget and Operations Infrastructure & Technology. All these are meant to boost the market.”
Oteh, also said that the CMC has been mandated to help develop a blue print for the capital market, stressing that it will be capital market master plan for ten years.
According to her, the plan will be assessed quarterly. The CMC will also come out with literacy plan strategy where the ordinary people can be able to read and understand the rules of the market. In her review of the performance of the capital market, she said, Nigeria remains amongst the top 10 performing markets in the world.
According to her, the performance was driven by signals notably with what Ben Bernanke said that we are coming to the end of the quantitative easing.
“But we also have some issues that could put fiscal pressures on us, which is of course multiple prediction that there won’t be a decline bond or if they are concerned about capacity to maintain the same level of production,” she said. She said Bernanke highlighted the increased participation of domestic investors the Nigerian stock market; signaling that confidence is coming back to our market.
Furthermore, Oteh stated that as the nation’s capital market focuses on attaining the $1trillion capitalization target by 2016, it still has a long way to go as the value of the market currently stands at $107billion.
The SEC boss, also called on the unquoted corporate entities to get their shares listed with a view to realizing the target. Oteh, who disclosed this while briefing journalists at the end of the CMC meeting said, the commission is working round the clock to woo multinational conglomerates, the power companies as well as the telecommunication companies to list their shares and boost the liquidity in the market.
According to her, “We will be very happy if everybody is working towards the $1trillion mark.
We will meet the target if the power companies, the telecommunications companies and the multinationals list their shares on the Nigerian Stock Exchange. Already, the sub-committee on Business Development is working on the listing agenda for large companies in Nigeria.
We are very much align with the G8 (Group of eight developed nations) in reducing illicit financial flow from the developing nations through transfer pricing or mispricing .The idea is that they will bring more liquidity to the market.”
The SEC boss also urged both the federal and state governments as well as corporate entities to pay more attention to the opportunities provided by the capital market in infrastructural financing.