Leading experts and stakeholders in capital market yesterday called on the Federal Government to rethink national economic development plan and build its long-term plan around the capital market to ensure faster and sustained growth and development.
The experts, who spoke at yearly economic review of the Chartered Institute of Stockbrokers (CIS), were unanimous that the outlook for the economy remained positive but efforts must be made to address identified loopholes and weak points to achieve optimal economic performance.
In the webinar entitled: “The Nigerian rconomic review for 2020 and outlook for 2021 with recommendations”, the CIS identified major factors that would propel the country’s growth despite the negative impacts of COVID-19 on businesses globally.
Presenting the institute’s position paper, Chairman, Research and Technical Committee, CIS, Mr Akeem Oyewale said the capital market has the potential to catalyse the nation’s development with right policies and patronage.
According to him, besides the impressive equity index performance, which led global returns with 50.03 per cent last year, the massive 446 per cent oversubscription of the Federal Government’s third Sukuk bond, issued to construct and rehabilitate 44 major roads across the country, has further confirmed the strong absorptive capacity of the capital market.
He noted that while the this year’s economic outlook was predicated on the timing and availability of vaccines to put COVID-19 under control, the government needed to stimulate the private sector through supportive policies while micro small and medium scale business enterprises should have greater access to viable long term capital.
He said the viability of the capital market as the engine room for growth would be accomplished if the market is supported, strengthened and stabilised with continuous liquidity.
According to him, based on the universally acknowledged principle that the money-short term and capital-long term markets complement each other in the economic development process, the Central Bank of Nigeria (CBN) should to extend structural and liquidity support to the equity arm of the Nigerian capital market.
He outlined that these structural and liquidity supports should include creation of an intervention fund for securities dealing firms, to avail them the necessary liquidity to maintain consistent position on quoted securities, thus stabilizing the market as well as permitting banks’ stocks to qualify for investment of margin lending facilities, under strict regulatory controls, because of its significant impact on market turnover.
“In view of the gradual return of local investors, we enjoin the Central Bank of Nigeria to be temperate in dealing with interest rate, liquidity and yield adjustments in its monetary policy. Historically, local pension funds served as the critical catalyst for stabilizing and propelling growth in the advanced economies of the world. We therefore urge the Pension Commission (PenCom) and Nigeria’s Pension Fund Administrators (PFAs) to significantly increase the percentage of pension funds invested in the Nigerian equity market. Investment of Nigerian pension funds in local equities remain less than 10 per cent of pension funds under management, but we strongly believe that, given the current needs and safety structures of the market, the 25 per cent statutory cap can be safely made a minimum figure for the PFAs,” Oyewale said.
Professor of Capital Market Studies, Nasarawa State University, Prof. Uche Uwaleke said the government could finance the budget deficit of N5.2 trillion through floating of Federal Government bond, securitization of debts and privatization of moribund companies.
Speaking on; “Capital Market Pathways To Financing The FGN Budget Deficits”, Uwaleke stated that government should issue infrastructure or revenue bonds or project-tied bonds to ensure that the proceeds are ring-fenced as opposed to the current resort to general obligations bonds which proceeds often go into recurrent spending.
An economic consultant, Dr Biodun Adedipe of B. Adedipe and Associates who spoke on “Global Economic Dynamics in 2021”, explained that success of COVID-19 vaccine in the United States and China would have positive impacts on Nigeria but strongly advocated for investment in Agriculture, information and communication technology (ICT) and manufacturing as they have potentials to revive the economy.
Adedipe added that government should make credit available, accessible and attractive for investment.
Another economic consultant, Mrs Kemi Akinde, urged the government to align fiscal and monetary policies and ensure consistency of both policies.
She also advised the Nigerian Stock Exchange (NSE) to commence trading in derivatives without further delay to enable investors enjoy the opportunities for risk management.
Akinde stated that the Securities and Exchange Commission ( SEC) should fully automate its fillings for efficient service delivery.
Earlier in his welcome address, President, Chartered Institute of Stockbrokers (CIS), Mr. Olatunde Amolegbe, said the council had approved a recommendation of the research and technical committee, that the institute carry out a thorough review of the Nigerian economy every year with a view to helping government, policymakers and industry regulators in the country craft effective strategies to accelerate GDP growth in the country.
– The Nation