BY MICHAEL EBOH

Group Managing Director/Chief Executive Officer, Skye Bank Plc, Mr. Kehinde Durosinmi-Etti, has advocated the sustenance of reforms in the nation’s capital and bond markets, to enhance their contributions to the growth and development of the real sector of the economy.

Speaking during the presentation of a paper, titled: ‘Finance: Catalysts for promoting and sustaining the manufacturing sector,’ at the 2011 Business Luncheon of the Manufacturers Association of Nigeria (MAN), Ogun State chapter, in Ota, Durosinmi-Etti noted that finance remained a pivot in initiating and sustaining investment.

He said that access to finance by the country’s manufacturing sector could be achieved by deepening the financial markets, efficient management of the various regulator-led targeted funds and respect for covenants.

Contrary to the requirement of long term funding for the real sector, he explained, the bulk of the funds in the financial sector are short term in nature.

He, therefore, called for sustenance of the reforms in alternative markets such as the capital and bonds markets, with a view to enabling them bridge the long-term funding gap.

He highlighted the need for efficiency in the management of intervention funding initiatives like those set up by the Central Bank of Nigeria (CBN), Bank of Industry, and the others, in deploying specialised funding to certain sectors.

Durosinmi-Etti also canvassed respect for covenants, as this will help instill confidence in investors, assuring them of the safety of their investments.

“If this is done, it would improve the country’s sovereign credit ratings and lower risks attributable to the economy,” he added.

He called for a continuous collaboration between regulators and operators in the financial sector in addition to the reform of Nigeria’s trade, investment and tax laws so as to create a conducive atmosphere for investment.

Speaking further, he said, “There is need for a strict adherence to the five-way test in granting loans for investment. These tests are character, capital, collateral, conditions and cash flow which will guarantee that the owners of the company are people of high integrity who can be trusted to honour their commitments.

“As different tiers of government seek to improve the economy by addressing infrastructural challenges, and promoting entrepreneurship, they should also seek to strengthen the financial markets and position it to provide an enduring avenue for valuable investment in the economy, especially in the real sector.”