Expert says Nigeria’s infrastructural gap can be closed through capital market funding

In view of the paucity of revenue to finance necessary developmental infrastructure and services in the country in recent times, a capital market expert, Emomotimi Agama has called on the government at all levels to take advantage of the opportunity available in the capital market through the issuance of bonds to access funds for developmental purposes.

Speaking at a recent webinar organised by STL Trustees Limited, Agama, who is the Managing Director of the Nigerian Capital Market Institute, a capacity building subsidiary of the Securities and Exchange Commission, hinted that the Nigerian bond market has become more popular as same is being embraced by Governments and corporate institutions to raise funds for crucial projects and business expansion/working capital requirements respectively. He added that projects like the reactivation of Obudu Cattle Ranch by the Cross River State Government and the initial development of Akwa Ibom State were financed through bond issuances, and a good number of developmental projects in Lagos State are also being financed through bond issuances.

Bonds are essentially long-term debt instruments in any structured economy geared primarily to guarantee access to potential resources for the government or company’s infrastructure / developmental purposes and also provide an outlet for investors to enjoy stable returns.

In Nigeria, the FMDQ Securities Exchange and the Nigerian Exchange Limited (NGX) are the platforms where debt instruments can be traded. Also, the only viable way to structure an issuance of tradable and secured debt securities under the law is for the securities to be constituted by a trust deed and for corporate trustees duly authorised by the Securities and Exchange Commission to hold both the issuer’s covenant to make payment on the securities and the security created by the issuer, on trust for the investors.

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In his analysis, Agama lamented the fate of municipal bonds in the country, describing it as the crying baby of the market because till date, there has been only one Municipal Bond Issuance in Nigeria, which was the Lagos Island Local Government Municipal Bond, which was raised for the construction of Sura market.

He called on corporate trustees and other relevant players in the industry to educate relevant stakeholders about the opportunities available in capital market bond issuances.

Responding, Funmi Ekundayo, the Managing Director/ Chief Executive Officer of STL Trustees Limited, thanked Agama for his incisive contributions to the webinar and emphasized that STL Trustees is fully committed to providing quality awareness on the values that corporate trustees bring to bear in almost every area of human endeavor both in their personal and corporate/commercial activities and undertakings.

STL Trustees has been in the business of corporate trusteeship for over three decades and possesses significant transactional experience across different sectors of the economy. It has participated as a Trustee in different groundbreaking capital market transactions with novel transactional dynamics some of which include the first infrastructural fund in Nigeria, the first sovereign Sukuk issued in Nigeria by the Federal Government of Nigeria, and the first sub-national Sukuk issued in the Nigeria capital market.