Capital market can act as financing tool for PPP projects –Yuguda

The Director-General, Securities and Exchange Commission (SEC) has stated that the Nigerian Capital Market has the capacity and is well positioned to finance Public-Private Partnership (PPP) infrastructure projects in the country. Yuguda made this remark at the 2023 Chartered Institute of Stockbrokers (CIS) National Workshop which was held in Abuja on Thursday. Speaking on the theme; leveraging the capital market to drive public-private partnership for effective national economic growth, Yuguda, citing a World Bank report, pointed out that Nigeria’s current level of public spending on infrastructure is one of the lowest globally and added that this lack of investment has resulted in a significant infrastructure gap, which has adversely affected the quality of infrastructure and limited access to essential services. The SEC DG who was represented by the Executive Commissioner, Corporate Services, Ibrahim Boyi, highlighted that given the current rate of capital expenditure, it would take approximately 300 years to bridge Nigeria’s infrastructure gap. He stressed the need for a new approach to financing infrastructure development in Nigeria to stimulate economic growth and argued that leveraging public-private partnerships is essential, and the capital market can play a crucial role in this regard. The Director-General explained that the capital market, with its patient capital and established project financing options, is well-suited to finance PPP infrastructure projects at various levels. He cited the common model used in many developed countries, where governments and private sector partners raise debt capital for PPP projects through bonds and loans. His words, “This is an infrastructure financing model that is a common choice in many developed nations of the world. Capital markets allow governments and private sector partners to raise debt capital for PPP projects. Governments can issue bonds to finance their share of the project costs while private companies can secure loans or issue corporate bonds for their contributions. The capital market’s ability to provide funding, risk management tools, liquidity, and efficient allocation of resources make it a crucial partner in the success of PPP projects. It allows governments and private sector partners to leverage their strengths and resources to deliver essential public infrastructure and services”. He thereafter commended the CIS for its role in developing the economy by equipping individuals and organizations with the necessary skills and expertise in the financial sector, which is crucial for the success of PPP projects.

SEC, FMMSD seek to raise capital for non-oil sector

The Securities and Exchange Commission (SEC) and the Capital Market Community are to partner with the Federal Ministry of Mines and Steel Development and other stakeholders to promote the use of alternative means of raising capital such as Non-Interest products, tokenization of assets, as well as adopting technologies such as FinTech. This among others was contained in a communiqué issued at the end of a two-day workshop on financing the Nigerian solid minerals sector through the capital market and the critical role of the commodities exchanges. The workshop also emphasised the need for the FMMSD and Federal Ministry of Education to re-prioritize the focus on STEM education at basic, secondary and tertiary institutions.  According to the communiqué, “There is a need for the Capital Market Community to ensure that the market infrastructure that supports the bringing to market of mining ventures is in place, while also protecting investors.  “All stakeholders should be involved in promoting sustainable practices and ESG standards within the mining industry while the FMMSD is to ensure the availability of geoscience data, given that it is essential alongside relevant market data in enabling intermediaries and commodities exchanges to structure products for the mining industry.  The participants also agreed that the FMMSD should collaborate with SEC and other stakeholders to develop capacity in the industry and address the issue of interference in mining activities by the State Government, which is identified as a major challenge faced by mining companies, the FMMSD is to take concrete steps to resolve the conflict in State and Federal laws as well as overlapping oversight. Earlier in a keynote address, the Executive Commissioner Operations of the SEC, Mr. Dayo Obisan said the solid minerals sector possesses immense transformative potential for sustainable economic growth in Nigeria and holds immense potential to contribute significantly to national economic diversification and sustainable development goals.  “With over 44 minerals discovered across the Federation, the mining industry can play a vital role in diversifying our economy away from crude oil dependency. The FMMSD has embarked on various initiatives to increase the sector’s contribution to Nigeria’s GDP from 0.5% to approximately 3% by 2025. To address the financing challenges faced by the mining industry, the SEC Commissioner said stakeholders must recognize the crucial role of the capital market in providing much-needed funding for large-scale mining projects as the capital market offers a wide array of financial instruments and products, attracting long-term investments and diversified sources of funding.  He said by tapping into this market, mining companies can strengthen their financial position and promote transparency, accountability, and good corporate governance practices to attract both domestic and foreign investors, stimulating investment inflows and fostering growth in the sector. He stated that to address these challenges, some practical solutions may include, but not limited to; attracting strategic investors who have established mining operations can bring expertise, technology, resources, and access to international markets. Such partnerships can be in the form of equity capital or debt financing, allowing miners to benefit from immediate cash injections and technology support.