A wake-up call has been made to the Federal Government of Nigeria to rely on the capital market for financing its huge infrastructural financing and budget deficit.
The call was made in Lagos during a one-day dialogue organised by the Chartered Institute of Stockbrokers (CIS), Association of Stockbroking Houses of Nigeria (ASHON), as well as the Association of Issuing Houses of Nigeria (AIHN) at the weekend.
The chairman, NASD OTC Plc, Mr Olutola Mobolurin, in a keynote presentation, stressed that the 2015 budget proposal did not address key issues, stressing that the baseline assumptions of the budget were faulty, especially with regards to the oil price benchmark.
“The benchmark for brent for the budget is about N65 but we know that today it is about N48,” he disclosed.
Mr Mobolurin urged the government and policy makers to look inwards to source funds from the capital market to finance its infrastructural projects and budget deficits.
He also emphasised the need for government to deregulate the oil sector as a way of attracting considerable investments in the oil sector.
“Until they remove subsidy, we will not get the considerable amount of investment that we need in the oil sector. Why should anybody invest in oil when the prices are regulated by the government,” he noted.
He, however, recommended that the savings culture of the people should be bolstered as well as a minimum of 20 per cent of Pension Fund Administrators’(PFAs) investment in equities.
The NASD chairman, who noted that foreign portfolio participation in the market had increased from 14.8 per cent in 2007 to 59 per cent as of November 2014, said, “We must generate savings within the country to supplement the foreign investment. We cannot depend on foreign investment if we want to salvage this country. We need to expand local institutional investment capacity and to achieve this; pension fund administrators must play a larger role to do this.”
“They must participate actively in the formation of the capital market. They should buy mature bonds and tested companies. 20 per cent of all pension funds must be invested in equities.”
On his part, the President, CIS, Mr Albert Okumagba, called on the Federal Government to promote the culture of savings in the country through appropriate incentives.
He added, “Another approach to national savings is the review of the privatisation programme of the Federal Government and the divestment of its holdings in the privatised companies in order to mobilise funds and encourage the private sector operators to develop the economy while the government provides an enabling environment.
He also called on the government to consider the further devaluation of the naira.
Source : Tribune