Senate asks LGAs to tap into capital market

The senate committee on capital market and institutions says local governments must embrace the capital market to fund critical infrastructure instead of relying on federation allocations.

Osita Izunaso, chairman of the committee, highlighted this in a statement ahead of a national stakeholders’ summit on municipal bonds and Sukuk, scheduled to hold in Uyo, Akwa Ibom.

Themed ‘$1 Trillion Nigerian Economy: Infrastructure Financing through the Capital Market’, the summit is expected to attract participants from government, regulatory agencies, the private sector, and the investment community.

‘BONDS OFFER SUSTAINABLE ALTERNATIVES’

Izunaso said municipal bonds and Sukuk offer sustainable, market-based financing options that have already been deployed successfully in several countries.

“These instruments offer sustainable, market-based alternatives to traditional funding and have been successfully deployed globally,” he said.

He explained that expanding financing options to local governments would help deliver infrastructure projects in areas like roads, healthcare, housing, transport, water supply and education.

According to him, access to the capital market would reduce over-dependence on federal revenue, strengthen local fiscal autonomy, create jobs and fast-track Nigeria’s push towards a $1 trillion economy.

Emomotimi Agama, director-general of the Securities and Exchange Commission (SEC), also backed the initiative, saying Nigeria’s growing infrastructure deficit demands innovative financing tools.

“Infrastructural gap in Nigeria can be met effectively through capital market funding,” Agama said.

He added that the summit is aimed at creating awareness about the opportunities municipal bonds and Sukuk offer to governments and investors.

‘GROWTH POTENTIAL’

Agama described bonds as long-term debt instruments that enable governments and corporations to fund development while offering investors stable returns.

“The Nigerian bond market has become more popular as it is being embraced by governments and corporate institutions to raise funds for crucial projects and business expansion,” he said.

He urged federal, state and local authorities to leverage the capital market to raise funds for developmental projects amid limited public revenues.

Organisers of the summit say the goal is to lay the foundation for a robust municipal bond and Sukuk market that empowers LGAs to mobilise long-term capital for infrastructure.