Govt to pay N1.8 trillion domestic debt with bonds
From Gbenga Agbana and Mathias Okwe,
Abuja
THE Federal Government yesterday disclosed that it would securitise its N1.8 trillion domestic debt stock and asked the private sector to invest in the venture.
President Olusegun Obasanjo disclosed this yesterday in Abuja while addressing industry captains gathered in Abuja for the Nigerian Stock Exchange (NSE) bi-ennial conference.
Represented at the ceremony by the Finance Minister, Dr. Ngozi Okonjo-Iweala, President Obasanjo explained that the move was part of the Federal Government's plan to deepen the depth of the capital market.
He said: "This administration is poised to deepen the capital market. That is why it returned to the capital market to raise money through bonds.
"There is no way the economy can grow without the active participation of the capital market, President Obasanjo said.
He also told the industry chiefs that the country required at least $30 billion before 2007 to implement the recently launched National Economic Empowerment Development Strategy (NEEDS) programme. He sought the NSE assistance in raising of the funds to enable the Federal Government to implement the programme.
He explained that the central objective of NEEDS was to facilitate the development of a private sector-led economy and urged the sector to play its role creditably to realise the vision for the country.
President Obasanjo praised the several feats of the NSE under the leadership of its Director-General, Dr. Okereke-Onyiuke, noting that these achievements had made the NSE, one of the best in Africa.
He stated that the NSE's current turn-over of between N250 billion to N300 billion yearly as well as the increasing number of persons in the NSE was an indication of its high standard, adding that the feat required celebration.
He however, advised the NSE to flush out all miscreants and fraudsters who would want to use it to defraud.
Speaking earlier, President of the NSE, Mr. Raymond Obieri, said the conference was aimed at strengthening the relationship with the issuers of securities, market operators and other stakeholders as part of the overall effort to enhance development of the stock market.
"As a self-regulatory organisation (SRO) the Stock Exchange is fully aware of its role in making the market a safe place for savers and users of funds. "Therefore, the Exchange will continuously work to promote a fair, orderly and efficient stock market, even as it seeks the understanding and support of all stakeholders," the NSE president pledged.
Speaking on the theme: "A Forum For Positive Change," Obieri said it was very relevant and timely considering the bold initiative taken by the existing administration as encapsulated in the NEEDS programme.
He said the deregulation /internationalisation of the capital market and the privatisation programme had increased the population of shareholders in quoted companies.
These, he continued, had necessitated certain regulatory changes to further stimulate investors' confidence and prevent the occurrence of corporate scandals and insider abuses as happened in some developed markets.
He pledged that before the end of this year, NSE would introduce some derivative products, especially mortgage backed securities as part of its strategy to complement government in the housing delivery programme and also to sustain the pursuit of transparency and accountability which he said was the bedrock of NSE market.
Also addressing the industry chieftains, the Chairman of the House of Representatives Committee on Capital Market, Ahmed Aliyu Wadada hinted of a legislation to ensure compliance as regards the use of funds by states for the purposes they were raised from the capital market.
The move, the lawmaker clarified was imperative becauswe experience had shown that most bonds raised by states were not utilised fully for the purposes they were meant for.
He also observed that the second tier window of the stock exchange remained inactive, because securities for the sectors were hardly successful on the trading floor of the Stock Exchange.
The lawmaker also pointed out one more point in the transaction at the capital market which he said ought not to be.
He said: "On a sober note, the due diligence clause is missing as a listing requirement and this should be a part of the SEC regulations with such firms made to be liable.
"However, in the prospectus, this bulk is thrown to the Accountant-General (AG) of the Federation for certification. The busy schedule of the AG confirms the need to set up a body to provide certification of claims and submission to NSE/SEC.
"The issue of Onwuka High Tech. Securities which was floated by the Stock Exchange without any dividend paid to date is a good case study that call for a thorough due diligence," Wadada further stated.
He then tasked the Research and Development unit of the Securities and Exchange Commission (SEC), to be more functional and proactive by sourcing/collecting data on recent developments from contemporary emerging and developed markets adaption.
The lawmaker revealed that the National Assembly was working on an Act that would address most of the issues.
About 26 financial institutions among them, banks and investment houses are exhibiting at the bi-ennial conference.
