Nigerians Will Not Invest in Discos in Their Current State - SEC

14 February 2020

Lagos — The Securities and Exchange Commission (SEC) has said investors will not be willing to stake funds in power Distribution Companies of Nigeria (Discos) if they approach the capital market for listing in their current state.

The Ag Director General, Mary Uduk disclosed this at a breakfast session with Business Editors on the sidelines of the 2020 budget analysis forum held on Thursday in Lagos

Uduk said, "They were suppose to have operated for 5 to 7 years and then be ready to come to the capital market. As I speak, none of them is ready, so if they come, no one will be willing to invest in them.

"I am aware that they have asked for a review in tariff but no responsible government will agree to a tariff increase if you as he Discos cannot show that you are functioning efficiently."

The investment expert further said the federal government is to clean the Discos because it realises that the electricity companies can only raise long term funds from the market.

She also disclosed that the SEC is working with the Bureau for Public Procurement (BPE) to actualize the desire to bring more public companies to the exchange.

Similarly, participants at the 2020 budget, in the communiqué issued at the end of the forum, stated that they have canvassed the need to attract private and domestic capital to fund and support critical infrastructure is in the country.

In addition, they recommended the provision of conducive business environment and credit enhancements for the Small and Medium Scale Enterprises (SMEs) to thrive, because the SME sub-sector is one of the critical pillars for economic growth and national prosperity;

The communiqué stated, "There is need to create more hedging opportunities in the Nigerian capital market, as these have implications for market liquidity and efficiency.

"The government needs to work towards encouraging the participation of the private sector in the Nigerian business environment. The power and agricultural sectors are key sectors where in-depth reform and partnership with the private sector are important. There should be partnership with the private sector to mobilize domestic resources, create quality jobs and lift people out of poverty".

The participants also advocated the need to leverage technology for trade and focus on adding value to the agricultural sector which is currently very low-paying. This sector they posited needs to become more beneficial to those involved and can be done through means such as provision of power for crop preservation, thus eliminating post-harvest losses.

Earlier in her opening address, Uduk emphasised the important role that budgets play in an economy, and by extension in the capital market.

The seminar had as its theme 'Leveraging the 2020 Budget and Finance Act for the Growth of the Nigerian Capital Market.'

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