Ahead of its first business lunch meeting expected to hold in Lagos tomorrow, the Association of Issuing Houses of Nigeria (AIHN), has identified four key areas President Muhammadu Buhari should focus on in the next four years in order to lift the capital market.
These areas include policy reforms that promote market economics; liberalisation of the oil and gas sector; power sector reforms and private sector-led infrastructure development.
Speaking with journalists, the President of AIHN, Mr. Chuka Eseka, noted that across various aspects of the economy, the federal government must be committed to promoting market-based ideologies as indispensable tools to liberate the economy from the shackles of inefficiency.
“Most industrialised and leading economies and capital markets around the world operate on sound market principles. Nigeria cannot and must not be different if the capital market would help raise the necessary finance needed for growth and development,” he said.
According to Eseka, who is also the Chief Executive Officer of Vetiva Capital Management Limited, a low hanging fruit to enhancing capital market growth would be liberalising the upstream and downstream operations of the oil and gas sector, saying when the economics is right, the capital market can easily provide the funding needed to grow the sector.
“In addition, the capital market can serve as the avenue to attract both local and foreign capital essential for driving private sector-led growth and development.
“The power sector is in dire need of funding that the sector cannot attract in its current state. Critical market reforms, most especially in the areas of tariffs, are needed to re-focus the sector and drive it to reach its full potentials.
“For instance, if the entire value chain including transmission is decentralised and opened up to the market, GENCOs and DISCOs can get listed to raise capital by way of IPO.
“This sector is crucial in our capital market agenda setting in the next four years.
“Through PPP arrangements, the private sector can help expand the country’s infrastructure stock levels which has been estimated to require up to US$50 billion annually over the next 60 years.
“This is a capex level that the government’s revenue and borrowing capacities cannot shoulder. Therefore, if infrastructure gap must be bridged, the capital market must be central to the strategies deployed,” he said.
The AIHN boss pointed out that the world over, capital market remains the barometer for measuring the health of the economy and in Nigeria, the case is not any different. According to him, following the global financial crises of 2008/2009 and the severe economic shock Nigeria suffered in 2014 with oil price crash, capital market activities for Initial Public Offerings, rights issue, secondary offer, etc, have been significantly affected.
From Equity Capital Market (ECM) perspective, the last five years has been tough,” he explained.
On his part, the First Vice President of the association, Mr. Ike Chioke, pointed out that urgent reforms are required in the power and oil and gas sectors.
“We need to spend about $20 billion every year in the next 10 years in order to close the infrastructure gap and without taking decisive steps to address this, we would never get there.
“So, this our roundtable coming up in Lagos tomorrow, is critical and the right time to hold it is now. This is because it creates part of the framework for the new government that would be sworn in in May, so that they can have something on the table as part of their plan to reform the economy,”Chioke who is also the Chief Executive of Afrinvest West Africa Limited said.