Infrastructure development has been described as critical for the achievement of economy prosperity, sustainable growth and development of Nigeria.
Therefore, the need to attract private and domestic capital to fund and support critical infrastructure is paramount.
These among others were the resolutions reached at the end of the Securities and Exchange Commission (SEC) yearly budget seminar.
The seminar, which held in Lagos on Thursday February 13, 2020 had as its theme “Leveraging the 2020 Budget and Finance Act for the Growth of the Nigerian Capital Market.”
President Muhammadu Buhari presented the 2020 budget to the National Assembly on October 8, 2019 which was eventually signed at a record time on December 17, 2019, with an approved budget of N10.6trillion.
Participants also recommended the provision of conducive business environment and credit enhancements for the Small and Medium Scale Enterprises (SMEs) to thrive, because the SME sub-sector is one of the critical pillars for economic growth and national prosperity;
According to the Communique at the end of the seminar, “There is need to create more hedging opportunities in the Nigerian capital market, as this has implication for market liquidity and efficiency;
“The government needs to work towards encouraging the participation of the private sector in the Nigerian business environment. The power and agricultural sectors are key sectors where in-depth reform and partnership with the private sector are important. There should be partnership with the private sector to mobilise domestic resources, create quality jobs and lift people out of poverty”.
Participants agreed on the need to leverage technology for trade and focus on adding value to the agricultural sector which is currently very low-paying. This sector they posited needs to become more beneficial to those involved and can be done through means such as provision of power for crop preservation, thus eliminating post-harvest losses.
In her opening address, Acting Director General of the SEC, Mary Uduk emphasised the important role that budgets play in an economy, and by extension in the capital market.
This importance Uduk said, is actually the basis on the seminar is organised to analyse the risks and opportunities presented by the government budget.
She said over the years, the SEC Budget Seminar Series has served as a forum for evaluating the connection between the Nigerian capital market and the annual Federal Government budget, with the aim of identifying how the capital market can contribute to, and benefit from, the budget and its implementation.
“In the course of the Seminar, we shall look at the performance of the 2019 budget, the performance of the capital market, the proposed 2020 budget as well as its likely impact on the capital market.
“Also critical are the aspects of the new Finance Act that affect the capital market. These include the provisions on Securities Lending, Real Estate Investment Schemes, minimum tax, increased Value Added Tax, amongst others.
In his remarks, former Chairman of the SEC, Suleyman Ndanusa and Chairman of the occasion, said the annual budget cycle is important particularly in countries like Nigeria where government expenditure has significant impact on the economy.
Ndanusa said the budget sets the tone for the direction of the economy each year which presents opportunities and risks.
According to him, “I personally love the choice of this topic, given the pressing need to grow our capital market and the important role played in our economy by the government through its fiscal and other policies.
“Looking at some broad items of the 2020 budget; the total expenditure amounts to N10.6 trillion, which is a 19percent increase on that of 2019, but just about 6.5percent of the nation’s GDP. The budget is split into 79percent for recurrent expenditure and 21percent for capital expenditure with a deficit of around N2 trillion.
“How this deficit would be funded is always of interest to the capital market community; coupled with the implications of the choice of funding. There are the usual questions on whether we are returning to a period of high treasury yields and the consequent crowding out of corporates from the debt markets as well as the tradeoff between investments in fixed income and equities segments of the capital market” he added.