Participants
at the 2017 Nigerian Debt Capital Markets Conference and Awards, organised by
the FMDQ OTC Securities Exchange in Lagos, at the weekend, have
urged Federal
Government-owned firms companies to issue bonds for infrastructure project in
order to expand the nation’s debt capital market.
Besides,
they also urged government to ensure that all interventions and assisted
funding must be issued in bonds, note form, and subsequently listed on the
Nigerian Stock Exchange (NSE), or FMDQ platform.
A debt issue
is a fixed corporate or government obligation, such as a bond or debenture. A
debt issue is a financial obligation that allows the issuer to raise funds by
promising to repay the lender at a certain point in the future and in
accordance with the terms of the contract.
Indeed, the
participants argued that if the nation’s debt capital market was expanded,
there would be effective mobilisation, and allocation of financial resources to
fast-track economic growth.They added that robust debt capital market would go
a long way to boost the nation’s gross domestic product (GDP), and make it more
competitive in the global market.
Furthermore,
they suggested that regulators must fast-track the issuance process, build
capacity, and raise the standard of issuers in the market.
Specifically,
the Chief Executive Officer, Chapel Hill Denham, Bolaji Balogun, argued that
government must be strategic to fast-track Nigeriaís economic growth, and
stimulate activities in the market.He argued that there was the need to
transform the market from primary commodity market to a robust debt capital
market to develop the country and secure its future.
According to
him, the country can witness a reasonable level of growth if government
compelled firmsí receiving concessions or subsidies to float initial public
offerings (IPOs) in the market within three years.
Government
must privatise all major government-owned assets, and list them in the market
to grow this economy in a sustainable manner. The economy had witnessed
unprecedented drag over the years. Infrastructure in Nigeria needs to be
financed largely in local currency because the U.S. dollar trail risk for
Nigeria to price everything in dollar denominated currency is huge. The current
impact in power on infrastructure owners, banks, government and the people is
plain to see.î
The Partner,
Templars Law, Zelda Akindele, said Nigeria would witness less volatilities
associated with foreign exchange (forex) issues if the nationís debt capital
market is considered a major option for project financing.If there is
sufficient debt capital market, the forex issue would have been less painful.
We need to tap into local sources financing to fund infrastructure and support
investment in Nigeria.
There are
large spaces for innovations, product offerings, and development, and these
products must meet the needs of the market to accelerate growth.
The Managing
Director and Chief Economist, Africa, Standard Chartered Bank, UK, Ms. Razia
Khan, said Nigerian regulators must ensure increased collaboration with market
players to enhance activities in the debt capital market.
There are
regulations without full framework. Regulators must work hand in hand with the
market players to improve transparent and disclosures in the market.The
Managing Director, United Capital Plc, Mrs Oluwatoyin Sanni, had, in a recent
interview with The Guardian, explained that Nigeria cannot expand its debt
capital market without stable and lower interest rates and foreign exchange
regime.
She said:
“The Debt Capital Market will benefit from stable and lower interest rates on
the shorter end of the curve. A stable foreign exchange regime must be
created.“Economic policy stability and predictability, reduced activity by the
Federal Government in the domestic debt capital market to avoid crowding out
the corporate and sub-national segment.”
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