Banking sector overburdened by government borrowing – NESG
Jhe Managing Director of the Nigeria Economic Summit Group (NESG), Mr. Laoye Jaiyeola, is concerned about the overburdening of the banking sector due to government borrowing.
Mr. Jaiyeola, who said this during a meeting with the Securities and Exchange Commission (SEC) in Abuja, urged governments and companies to look to the capital market for their financing needs.
To strengthen the collaboration, he noted that transactions could be restructured to raise bonds, bills and all those things that would finance whatever needed to be financed without going through the banks.
He said: “The stock market has to take the bull by the horns or we’re going to be in perpetual debt as a nation, and that won’t help us.
“That’s one of the reasons we say re-engage; how can we get an investment and securities act (ISA) that will ensure that the financing needed for development in Nigeria is prioritized and then we can finance Nigeria for the longer term.
SEC Managing Director Lamido Yuguda said the capital market could actually do more in the areas of providing the country with the necessary infrastructure to support the government in its development effort.
He said: “Our collective economic power is greater than the government, and in many countries you find that the capital market is actually funding the government. When you save, the financing is used to create economic value that actually improves your standard of living, and it’s a win-win. You get financial returns and also get utility from the investments, and this is actually achievable.
Yuguda welcomed the collaboration with NESG, saying the two organizations could do more for the country’s economic development.
SEC Executive, Legal and Enforcement Commissioner Reginald Karawusa said the current ISA was signed into law by Chairman Umaru Musa YarÁdua in 2007.
Mr. Karawusa said the SEC had established an industry-wide committee to rework the law, adding that several market experts were involved in the overhaul of the law, as well as input from stakeholders.