Budget 2022: ACMAN advises FG to exploit the capital market to finance N6tn’s deficit

• Supports the efforts of CBN on production growth, eNaira, others

• Insists that the weakening of the currency could affect government spending

James Emejo and Sonia Mayomi in Abuja

The Association of Capital Market Academics of Nigeria (ACMAN) yesterday called on the federal government to take full advantage of opportunities in the Nigerian capital market to address the infrastructure gap in the country.

The association noted that even if the government borrows largely to close the N6 trillion deficit in the 2022 budget proposal, it should tie future loans to self-liquidating projects given the current and unsustainable burden. debt service.

Speaking to reporters at a briefing on the Appropriations Bill and various economic issues, ACMAN Chairman Prof Uche Uwaleke said: Because you are not going to get any money on the service, but use the income from this project to pay off the debt.

“It is therefore up to the government to identify the viable projects that it needs to finance and to approach the capital market for the funds. “

The association also praised the efforts of the Central Bank of Nigeria (CBN) to support the economic recovery as well as the proposed launch of eNaira which it said was positive for the economy.

Uwaleke, observed that financing infrastructure would continue to pose a major challenge to the government, except that the private sector was in the driver’s seat.

Welcoming the innovative financing programs proposed in the budget, including the public-private partnerships (PPP) and sovereign green bond program, the group specifically advised the government to resort to tax bonds and reap the benefits of securitization actives.

Uwaleke said: “We recognize that part of the 2022 budget deficit will be funded by the proceeds of privatization. However, the amount involved is not significant.

“The government is advised to identify the most suitable assets for partial privatization and execute the process through the capital market.

“In this regard, we welcome the government’s plan to partially privatize the new company NNPC Limited through the Nigerian Stock Exchange. “

ACMAN also praised the series of interventions by the

CBN, which facilitated the country’s early exit from economic recession in 2020, as well as the relatively strong real GDP growth of 5.01% recorded in the second quarter of the year (Q2 2021).

The association noted that the Nigerian stock market outperformed global stock markets in 2020, mainly due to the low interest rate environment engendered by the CBN.

He further praised apex bank on the proposed eNaira project as well as its ongoing efforts to regulate the fintech space.

The group, however, called for close collaboration between the CBN and the Securities and Exchange Commission (SEC) for effective regulation given the breadth of fintech spanning credit, payments and investing / wealth management.

Regarding the recent call for the devaluation of the naira, ACMAN warned that given the weaknesses, structural imbalances and vulnerabilities in the Nigerian economy that have yet to be addressed, the weakening of the naira at this time would serious consequences for the 2022 budget proposal and, by extension, the capital. Marlet.

The Chairman of ACMAN said: We urge the CBN to continue its accommodative monetary policy, which has had a salutary effect on the stock market while at the same time combating supply-induced inflation, especially through ‘targeted interventions.

Uwaleke advised against floating the naira when key economic fundamentals are missing, adding that the export base is currently not well diversified to justify a devaluation.

He also said the executive decree on patronage of local products should be triggered, adding that government officials should lead the way in supporting products made in Nigeria.

The association is also committed to supporting President Muhammadu Buhari’s goal of lifting 100 million Nigerians out of poverty within a few years, adding that “to achieve it requires long-term funds that only the capital market provides.” .

“It goes without saying that the Nigerian capital market presents various untapped opportunities. Therefore, integrating the Nigerian Capital Market Master Plan into the country’s 2021-2025 National Development Plan will position Nigeria for sustainable economic growth and development, ”the group said.

The association also praised Buhari for bringing in the 2022 Appropriation Bill on time, noting that developments remain positive for the economy as it signals the federal government’s readiness to ensure a smooth budget cycle.

He said the positive signaling effect had been felt in the stock market, with the NGX All Share Index showing positive gains throughout the week of the budget proposal presentation.

“The ball is now in the National Assembly’s court to quickly consider and pass the bill so that implementation can begin as planned in January,” the group added.