FG to set up $25bn to build new, revamp decaying infrastructure.

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The Federal Government is to set up a $25 billion fund dedicated to infrastructure investments.

Minister of Finance, Kemi Adeosun however said that with the current environment of significant revenue squeeze and other budgetary constraints, these investments will clearly not come from government coffers alone.

She spoke at the inauguration of the Capital Market Master Plan Implementation Council (CAMMIC), National Investor Protection Fund (NIPF), and the launch of the Corporate Governance Scorecard for quoted companies by the Securities and Exchange Commission (SEC) in Lagos Thursday.

Former finance minister, Okonjo-Iweala had said the country needs about $14 billion annually to fund infrastructure, of which $10 billion should come from the federal level. Currently, the country’s spending on infrastructure is about $6 billion, she said

Adeosun however believed that this is where the capital market can really make itself relevant by stepping in to close the funding gap.

“A crucial assignment we have for the capital market community is to come up with other innovative ways of mobilizing the capital needed to address Nigeria’s infrastructure challenge”.

The Minister, represented by the Permanent Secretary Ministry of Finance, Mahmoud Isa-Dutse, said an efficient and vibrant capital markets are an indispensable feature of any modern economy supplying affordable medium-to-long term capital needed for growth as they facilitate mobilization of savings, accelerate capital formation, provide investment avenues and enhance efficient allocation of capital to growth sectors as no country has been able to develop without a thriving capital market.

“Nigeria needs and deserves a capital market that is characterized by high levels of liquidity, depth, breadth and sophistication to enable rapid socio-economic development.

“Going through the Master Plan, it is heartwarming to note that this is the type of capital market you envision for our country and indeed we desperately need such a market to emerge in order to tackle Nigeria’s biggest challenges of huge infrastructure deficit and unacceptable level of unemployment. As you all know, to grow our economy, we require significant funds to modernize our critical infrastructure.

She expressed worry that currently less than three per cent  of Nigerians invest in the capital market and even more worrisome, only 0.2per cent of Nigerians invest in mutual funds.
“Imagine the kind of savings to be mobilized, the liquidity to be injected and the sophistication to be developed if we improve these numbers by bringing millions more Nigerians to invest in the capital market.

“For Nigerians of faith and people who prefer ethical investments, we must deepen the non-interest product space so they can be involved in wealth creation opportunities the capital market offers.
“For a country and economy of our size, there is no reason why we should not be able to actualize the targets and aspirations we have set for ourselves within the Master Plan. Indeed, with diligent implementation, we shall emerge as “Africa’s most modern, efficient and internationally competitive capital market that catalyzes Nigeria’s emergence as a top 20 global economy

“With a detailed master plan we get to reap the benefits of strategic thinking, policy consistency, greater coordination, and hopefully better results. As we inaugurate the Council who will lead advocacy for the Capital Market Master Plan, I urge everyone here to see this as the important National assignment it represents ” she said.

She assured that as the Minister in charge of supervising the capital market, She would  support the SEC Nigeria to ensure that this project is successful and where necessary is willing to add the weight of her voice to facilitate achievement of key initiatives within the Master Plan.

Director General of SEC, Mounir Gwarzo said the SEC’s enabling law, Investments and Securities Act (ISA) 2007, in foresight requires the SEC to set up a national investor compensation scheme.

Specifically, Section 13(k) of the Investment and Securities Act 2007, enjoins the Commission to act in the public interest having regard to the protection of investors and the maintenance of fair and orderly markets, and to this end establish a nationwide trust scheme to compensate investors whose losses are not covered under the Investors Protection Funds administered by Securities Exchanges and Capital Trade Points”.

Gwarzo said the 10-year Nigerian capital market Master Plan, which has become SEC’s guiding document, considers the investor protection fund as a critical ingredient for restoring and sustaining investor confidence.

It therefore firmly recommended the urgent establishment of the fund. Since the new Management at SEC assumed duty, the NIPF and other capital market initiatives have received priority attention.

The SEC the DG said, has played its part and will continue to take its investor protection mandates with all seriousness adding, “We have provided the take-off grant for the initial operation of this Fund.

“Going forward however, the entire capital market community should come together to discuss details of how we can all contribute to continued funding for this critical market vehicle.”

The DG disclosed that as this year draws to a close, the Commission has identified key initiatives within the Master Plan that will receive priority attention next year.

These include Unified Licensing, Reduction in Transaction Cost, focus on SMEs, Regulation Framework for Crowdfunding, Easing Listing Requirements for SMEs, Introducing Fiscal Incentives for SMEs to access the market and demutualisation of NSE.

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