Chief Executive Officer of Nigeria Economic Summit Group, (NESG), Laoye Jaiyeola has asked the government and corporate organisations in need of funds for development to go to the capital market to reduce the stress on the banking industry.
Laoye said the banking sector is being overstressed, stating that the capital market is capable of pooling funds for anyone that is in need.
Data from the Central Bank of Nigeria (CBN) shows that credit from the banking sector to the private sector peaked at N36.7 trillion between January and December 2021. This represents an N5.1 trillion rise or 16.67 per cent in the 12 months.
Jaiyeola who spoke at a meeting over the weekend with the Securities and Exchange Commission (SEC) over the expectations from the capital market stated that transactions can be restructured to raise bonds, bills and all of those things that will fund whatever it is that needs to be funded without going through banks.
“The securities market needs to take the bull by the horn otherwise we are going to be in perpetual debt as a nation and that will not help us. That is one of the reasons we say let’s re-engage, how can we get an Investments and Securities Act that will ensure that the needed funding for development in Nigeria is given priority and then we can fund Nigeria for a longer term. The short term funding cannot help us; we need to begin to move to the long-term. We are passionate about it and we need to raise these funds for the needed development funding for Nigeria.
SEC Director-General, Yuguda Lamido affirmed the capacity of the capital market and stressed that huge funds for access by firms and the government for economic growth.
According to Yuguda, “our collective economic power is bigger than the government and in many countries, you find out that the capital market is funding the government. When you save, the finance is used to create economic value that enhances your standard of living and this is a win-win. You get financial returns and also get utility from the investments and this is achievable.
Yuguda states that the capital market plays a vital role in the development of any country through the provision of long term funds for infrastructure development among others, and assuring more capacity in the areas of provision of necessary infrastructure to support the government in its developmental efforts.
“It is a welcome development that we are talking with the NESG for there is something that needs to happen in this country. When you look at our policy environment, in many areas it is not conducive to the return of capital to investors and we are working hard to tackle this.
The SEC DG noted that the telecommunications companies are successful because no one is getting the services for free as everyone pays.
“We all pay for the services, no one is getting the services for free, but when we move on our roads, we say no we do not want to pay for it. In other countries, people pay for their roads and they are happy doing that because the roads are good.
“We need to have a collaboration with a group like NESG. Once we can put things right, investors will be willing to put in money and there will be returns.
Also speaking, Executive Commissioner Legal and Enforcement SEC, Reginald Karawusa stated that the current ISA was signed into law by then-President Musa YarÁdua in 2007, which makes it 15 years old now.
Karawusa said the SEC set up an industry-wide Committee to rework the law adding that several market experts were involved in redrafting the law as well as inputs from stakeholders.
According to him, “a draft was tabled to the 8th assembly, unfortunately, the assembly left before passing the Bill. Getting the bill passed will be a major thing for the capital market. There are new provisions that will strengthen the SEC to effectively regulate to make us a top-notch regulator to increase the number of products. There is also a provision that will enable us to play with the National Savings Scheme, which is another major gate changer if the Bill becomes passed. Therefore, any support we can get from the NESG will be appreciated.”