The Senate Committee on Capital Markets and Institutions says local governments should use the capital market to fund important projects rather than relying on federation allocations.
This was noted in a statement by the committee’s chairman, Osita Izunaso, ahead of a national stakeholders’ summit on municipal bonds and Sukuk, which is set to take place in Uyo, Akwa Ibom.
The summit, titled ‘$1 Trillion Nigerian Economy: Infrastructure Financing through the Capital Market’, is scheduled to draw attendees from government, regulatory agencies, the corporate sector, and the investing community.
According to Izunaso, municipal bonds and Sukuk are long-term, market-based financing options that have been effectively implemented in a number of nations.
“These instruments offer sustainable, market-based alternatives to traditional funding and have been successfully deployed globally,” he said.
He explained that giving local governments more funding alternatives would help them implement infrastructure projects such as roads, healthcare, housing, transportation, water supply, and education.
According to him, access to the capital market will lessen Nigeria’s reliance on federal revenue, increase local fiscal autonomy, create jobs, and accelerate Nigeria’s progress towards a $1 trillion economy.
Emomotimi Agama, director-general of the Securities and Exchange Commission (SEC), also supported the plan, stating that Nigeria’s expanding infrastructure deficit necessitates creative funding methods.
“Infrastructural gap in Nigeria can be met effectively through capital market funding,” Agama said.
He added that the summit is aimed at creating awareness about the opportunities municipal bonds and Sukuk offer to governments and investors.
Agama described bonds as long-term debt instruments that enable governments and corporations to fund development while offering investors stable returns.
“The Nigerian bond market has become more popular as it is being embraced by governments and corporate institutions to raise funds for crucial projects and business expansion,” he said.
He advised federal, state, and municipal governments to use the capital market to fund development initiatives in the face of inadequate public resources.
The summit’s organisers said the goal is to establish the groundwork for a strong municipal bond and Sukuk market that will allow LGAs to raise long-term finance for infrastructure projects.
