Use capital market as strategic weapon, expert tells FG

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The Chief Executive Officer, Chapel Hill Denham, Bolaji Balogun, has urged the Federal Government to use the capital market as a strategic weapon to restructure the economy.

Balogun, while speaking at the annual conference of the Chartered Institute of Stockbrokers, described the capital market as the solution provider to all challenges in the economy.

He said given the task of restructuring at hand and the lack of federal resources, the outcome was only achievable with massive private intervention from institutional and development capital utilising capital markets, best of the private sector initiatives, well-educated Nigerians and Diaspora capabilities through remittances and reversal of brain drain.

Balogun added that Nigeria was projected to be a top seven global economy and the third most populous country by 2050.

He stated, “This requires Nigeria to address its infrastructure and housing deficits, education and literacy, and employment and job creation. All these have capital market and sustainable finance solutions.

“Nigeria has several opportunities to use the markets to achieve all of its key objectives and lift the economy. Capital markets, in the right hands, can be the ‘strategic weapon’ for sustainable growth; they can also finance Nigeria’s infrastructure, housing, create jobs and alleviate poverty.”

He added that Lagos State’s debt capital markets’ experience was a success story that could be learned from.

Balogun stated that in the United States, 81 per cent of debt was sourced in the capital markets, with the bank market largely available for working capital, adding that the reverse was the case in Nigeria.

“In Nigeria, bank loan tenors have an average tenor of just over two years and the debt raised in capital markets in Nigeria is 90 per cent Federal Government and largely fuels recurrent expenditure,” he added.

According to him, the government’s spending at 5.6 per cent is way below average levels of other economies.

Balogun highlighted the need to mobilise private capital to bridge financing deficits, saying such mobilised private capital, when invested, would improve government taxes and provide it with a practical opportunity to increase its spending on the much needed infrastructure and social development.

He said, “All of Nigeria’s challenges, which represent significant opportunities, have capital markets solutions. The Federal Government must make all government-owned companies issue bonds for financing.

“All intervention/government-assisted funding should be issued in bond/note form and be listed on the FMDQ or the Nigerian Stock Exchange. All major government-owned assets should be privatised and listed, while companies receiving government concessions or subsidies have to initiate public offering within three years.

“The benefits are that it will force financial transparency, develop the naira bond market, develop the country and secure the future.”

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