By Peter Egwuatu
The Securities and Exchange Commission (SEC) has disclosed that state governments in Nigeria have borrowed not less than N900 billion from the capital market since 1978.
Director General, SEC, Mr Lamido Yuguda, disclosed this at a webinar organised by the Nigerian Stock Exchange (NSE) in partnership with the Nigeria Governors’ Forum (NGF) and the Nigerian Investment Promotion Council (NIPC), on ways by which sub-nationals can raise funds through the sale of state-owned enterprises.
The SEC boss, who was represented by Commissioner in charge of Legal and Enforcement, Mr Reginald Karawusa, noted that the amount was raised from the market through debt issuances since 1978.
Speaking on ‘Privatisation in Nigeria and the Outlook for Sub-national Economic Development’, he said a significant part of the funds were deployed to financing capital projects.
He stated: “Sub-national issuers in Nigeria have been able to access the debt capital market over the years since 1978, state governments in Nigeria have raised close to N900 billion through debt issuances. A significant part of these funds were deployed to finance capital projects across the country.”
Yuguda however said the ability of states to continue to borrow in a sustainable manner has been severely impacted in recent times, adding that with the huge infrastructure gap, decreased allocation from the federal purse owing to relatively low oil revenue and the depressed level of internally generated revenues, states are barely able to pay salaries after servicing their outstanding loan obligations.
Consequently, he advised that privatisation is an avenue for governments to unlock economic potentials inherent in government owned enterprises, adding that the focus on Nigeria’s journey on privatisation has largely been on the Federal Government.
“Several enterprises are still owned and controlled by the government, both at the state and federal levels. A number of these entities have the capacities to generate cash flows and corporate profitability,” he added.