Nigeria: Capital Market Must Strengthened to Drive Production, Create Employment

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The Director-General of the Securities and Exchange Commission (SEC), Mr. Lamido Yuguda has expressed the need for the capital market to be strengthened to accelerate domestic production and employment given the direct correlation between increase in production and job creation.

To achieve this, he said there is the need to leverage the capital market for intermediation by facilitating access to capital.

This, he said, can be done by making it easy for corporates to access long-term finance in an efficient manner, the capital market enhances the production levels of companies, thereby improving the capacity of such companies to expand their operations and employ additional labour.

Lamido spoke at the Annual workshop of the Chartered Institute of Stockbrokers with the theme, “Leveraging the Financial markets to achieve double digit economic growth for Nigeria,” held in Abuja.

The SEC boss posited that it should truly not be difficult to achieve double digit growth in Nigeria given that most key factors of production like a large vibrant youthful population, arable land, abundant rainfall, good drainage, and a large and growing pool of savings are available.

He said, “Infrastructure is the area where we have a major problem, and here I mean roads and rail transportation, power generation and distribution, health infrastructure, and the like. I believe the capital can play a vital role in the financing of infrastructure and forums such as this one would do well to dwell on this important subject.

“Recall that at independence in 1960 the domestic savings pool was rather limited, yet the new nation was able to mobilise adequate funds from both domestic and foreign sources to fund the construction of highways, railways and large power projects. These same projects are in a dismal state today when the population has grown more than threefold. The Commission is increasingly focusing its attention on this subject because of its impact on economic development and the quality of life of our citizens.”

According to Yuguda the theme of the workshop, “Leveraging the Financial Markets to Achieve Double Digit Economic Growth for Nigeria,” is very relevant, particularly for a developing economy like Nigeria. With a GDP growth rate of -1.92per cent in 2020 and an IMF growth forecast of only 2.5per cent for 2021, Nigeria requires higher and preferably double-digit growth rate to be able to reduce poverty and provide for the welfare of its citizens.

In addition, he said there is a need to urgently address the country’s high unemployment rate, which currently stands at over 30per cent.
The SEC boss said by serving these functions, the financial sector often facilitates domestic production and employment, especially when capital flows efficiently into the production process, leading to employment generation, increase in household disposable income, improved purchasing power and ultimately resulting in higher economic growth.

Yuguda disclosed that the SEC, as the apex body responsible for regulating and developing the Nigerian capital market undertakes specific activities to ensure investor protection, preserve the integrity of the market and improve its overall efficiency through registration, surveillance and enforcement activities.
In his remarks, President/Chairman of Council of CIS, Mr. Olatunde Amolegbe said Nigeria is blessed with immense human and natural resources, but expressed dismay that the country is listed among the poorest countries in the world in term of per capita income.

According to him: “Just recently, in 2020, the country fell into its second economic recession in 5 years, although largely attributed to the covid-19 pandemic which affected all countries in the world. We exited the recession in the fourth quarter of the same year 2020.

“However, the critical point we have to note is that, historically, it has been observed that poorer countries need a much faster rate of GDP growth than the advanced economies of the world in to maintain standards of living as well as keep up with higher population growth rate.”

– Thisday

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