6 February 2013

Nigeria: SEC Advocates Infrastructure Funding Via Capital Market

The Securities and Exchange Commission has stressed the need to access the nation's capital market to finance the infrastructural deficit in the country especially in the areas of housing, agriculture and roads.

Speaking in Abuja last week, the Director-General of SEC, Ms. Arunma Oteh, said the apex regulator was ready to facilitate the sourcing of such long-term funds from the market.

According to her, the commission recently organised a three-day capacity building workshop on securitisation for some of its workforce as part of efforts to prepare for the introduction of asset-back securities.

Oteh noted that the commission would leverage the depth of market capitalisation and available funds for medium to long term financing for the benefit of key sectors of the economy through the proposed asset-backed securities.

"There is a great recognition in the country that the Nigerian capital market is important for sourcing long term finance. We must therefore have a market that engenders confidence, and we believe it is critical to bridge the availability gaps in medium to long term financing for housing, infrastructure and agriculture, and that is why we held the workshop," she said.

She explained that the workshop would enable the Federal Government to come up with a framework on securitisation, which would not only deepen the capital market, but also form a critical aspect of the transformation agenda of President Goodluck Jonathan.

The SEC DG disclosed that there were only a negligible 20,000 mortgages in the books of banks in Nigeria, adding that this figure was too low when considered from the standpoint of the importance of mortgages to mass housing.

Apart from Securitisation products, Oteh said a Nigerian mortgage facility being coordinated by Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, would be unveiled before the end of the year.

This facility, according to her, would assist the country to increase the number of Nigerians who hold mortgage significantly and would also help to reduce the interest rate on housing financing.

Meanwhile, Oteh assured that the commission would continue to strengthen its enforcement mechanism, adding that a framework that would enable it address investor complaints effectively and within a minimum time frame had been presented by the Commission to the market for stakeholder input.

She stated that investor confidence was key to any market, explaining that like trust in a relationship which, once broken, takes a long time to restore because people would like to see what was being done before returning to the market.

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