By Chinwendu Obienyi
The Chartered Institute of Stockbrokers (CIS), has again urged the National Assembly to pass the Chartered Institute of Securities and Investment Management (CISIM) Bill in order to enhance global competitiveness in Nigeria’s capital market. This was even as it said the Federal Government’s borrowing activity vis-à-vis its budget deficit will spur the debt securities market, adding that the Government could finance the budget deficit of N5.2 trillion through the capital market.
Speaking on the CIS Annual Macroeconomic report titled; The Nigerian Economic Review for 2020 and Outlook for 2021 with recommendations in Lagos, Chairman, Research and Technical Committee, CIS, Akeem Oyewale, noted that with the negative impact of COVID-19 on facets of the economy, it was imperative for the government to churn out effective strategies to get the economy bouncing again.
Oyewale noted that even though most projections for recovery are centered around the end of the first quarter (Q1) of 2020, issues like rising debt services/revenue, unemployment, burgeoning budget deficit, low revenue accrual in terms of taxes needs to be urgently addressed.
While making recommendations, Oyewale urged the National Assembly to pass the CISIM Bill as the proposed act is a fundamental tool to meet the regulatory demands of the contemporary Nigerian Capital Market (NCM). “This would be in the area of training and certification and further complements the efforts of the Securities and Exchange Commission (SEC) and various trading platforms in that regard. CIS has made maximum efforts to accommodate the interests of all relevant trade groups in the NCM in the Bill and remain open to any cogent suggestions”, He stated.
According to him, the roll out of vaccines for COVID-19 and the electoral victory of Biden in the U.S portend a positive economic outlook for Nigeria and the world in 2021 while the Central Bank of Nigeria (CBN) monetary policy in 2021 will be driven by the urgency of stimulating growth to get the country out of recession.
“The entire economic outlook for 2021 is predicated on timing and so we are urging the government to move aggressively to obtain the vaccines and make them available to Nigerians. We expect FG’s borrowings to spur the debt securities market but yields will remain moderate and the prospect for the equities market remains positive as a moderate interest rate environment will keep the market in the green especially in the second half (H2) of 2021.
Historically, local pension funds served as a critical catalyst for propelling growth in advanced economies, we therefore urge pension fund administrators (PFAs) to significantly increase the percentage of pension funds invested in the Nigerian equity market”, Oyewale said.
Commenting further, the President, Capital Market Academics of Nigeria (CMAN) and Professor of Capital Market Studies, Nasarawa State University, Prof. Uche Uwaleke said the government could finance the budget deficit of N5.2 trillion through floating of Federal Government bond, securitization of debts and privatization of moribund companies.
While speaking on “Capital Market Pathways to Financing the FGN Budget Deficits”, Uwaleke stated that government should issue infrastructure or revenue bonds or project-tied bonds to ensure that the proceeds are ring-fenced as opposed to the current resort to general obligations bonds which proceeds often go into recurrent spending.