By Chinwendu Obienyi
Nigeria needs to stop borrowing and instead focus on accessing the capital market to raise more funds rather than plunging the nation into further debt. This was the view of capital market operators after President Muhammadu Buhari’s address to the nation at the weekend.
President Buhari had said his administration was addressing the twin underlying drivers of insecurity namely poverty and youth unemployment and added that interventions led by Government and the Central Bank of Nigeria (CBN) driving economic growth over the past 6 years were targeted mostly to the agricultural, services, infrastructure, power and health care sectors of the economy.
He noted that the Economic Sustainability Plan – the FG’s rebound plan for the COVID-19 pandemic developed in 2020 is currently being executed. The plan, according to him, is primarily focused on the non-oil sec- tor, which has recorded phenomenal growth contributing over 90 per cent to the GDP growth in Q1 2021.
“Though marginal, we have recorded GDP growth over two quarters; Q2 2020 and Q1 2021. This is evidence of a successful execution of the ESP by the Federal Government. My vision of pulling 100 million poor Nigerians out of poverty in 10 years has been put into action and can be seen in the National Social Investment Programme, a first in Africa and one of the largest in the world where over 32.6 million beneficiaries are taking part.
“We are able to do all these and still accelerate our infrastructure development through sensible and transparent borrowing, improved capital inflow, improving and increasing revenue through capturing more tax bases and prudent management of investment proceeds in the Sovereign Wealth Fund”, Buhari said.
Responding to the President’s speech, capital market operators in a telephone chat said the current administration should stop borrowing and access the stock market for more funds.
The Managing Director, Crane Securities, Mike Eze, said, the present administration has strayed away from the burn- ing issues in the economy while diverting its energy to the economics of politics.
“The economy as a whole is a holistic thing and I feel that they should put more energy in the capital market as it is the engine room of the economic system. I am not saying the FG neglected it because when they started, there was much enthusiasm or steam in the capital market.
However, the second tenure has not shown the amount of steam we saw in the beginning and this is because politics has taken center stage. They have refused to accept the fact there is now economics of politics here. We have issues from lots and lots of borrowings, no transparency, insecurity issues and implementation of the policies they embarked on has not yielded anything”, Eze said.
According to him, a country is not just made up of only political systems but of sectors which drive its growth. One of these is the capital market, that steam or energy needs to come back, we have been borrowing for years, why can’t the government come to the market to raise more capital or long term funds? There is an urgent need to refocus, rethink or redesign strategies as to how every sec- tor can work again. Yes it will take time, but now is the time to take a step and not keep borrowing and putting the country into debt”.
Corroborating Eze, the Chairman, Association of Securities Dealing Houses of Nigeria (ASHON), Chief Onyenwechukwu Ezeagu, said the association has proposed some measures by which the government can revive the securities market through enhancement of stock- brokers’ liquidity and implementation of some policies to boost investment in the market.
“The government should patronize the capital market – the taste of the pudding is in the eating. Thus, this will spur others including foreign investors to believe in the market.
The government should urgently consider the proposal by the Securities Dealing Community ably represented by the Chartered Institute of Stockbrokers (CIS) and the ASHON through the Capital Market Master Plan Implementation Committee (CAMMIC) on the rejuvenation of the market as part of the financial system review currently being worked on”, he said.