Sunday, November 12, 2017 2.00PM / Proshare WebTV
The opportunities and prospects of the 2018 Budget of Consolidation for the Nigerian capital market, came to the fore at the second ever Securities and Exchange Commission budget seminar in Lagos.
It was an opportunity for scholars, economists, business leaders, market stakeholders and policy makers to converge and explore how the N8.6trl budget presented recently by President Muhammadu Buhari will impact the capital market.
Giving the opening remarks, the Director-General of the Securities and Exchange Commission Mr Mounir Gwarzo informed stakeholders that the SEC Nigeria budget seminar which was the second since inception, was a platform for assessing the way the capital market can contribute and also benefit from the budget of the nation.
The Head, Research at the Securities and Exchange Commission of Nigeria Dr Afolabi Olowookere who was the guest speaker, asserted that budgets affect can affect capital markets indirectly through its impact on growth, inflation, interest and exchange rates.
Looking at stock performance Olowookere noted that it improved in 2017 due to the following factors; improved domestic macroeconomic fundamentals, CBN intervention in Forex market, improved company results, Pension Multi-Fund Structure & Regulatory Initiatives that boost investor confidence.
Speaking on the opportunities of the current Economic Recovery and Growth Plan of the Buhari administration, he was of the view that economic diversification created the avenue for venture capital and private equity activities, while pushing a competitive economy was a window for infrastructure & diaspora Bonds.
With the ERGP objective of investing in the people, exploring Green Bonds according to him was a viable option for alternative financing, and Governance through the use of capital market by Sub-national.
The economist also believed the capital can play additional roles in the following areas; privatization through listing, exploring capital market instruments to address housing deficit and encouraging Sub-nationals to issue revenue bonds.
On the 2018 budget implications for the Nigerian capital market, Olowookere shared that for the equities market key developments will include; preference for equities if interest rate falls, reduced uncertainties in exchange rate will attract foreign portfolio investments, government expenditure on cost-reducing infrastructure will benefit most firms and Listed companies that are contractors/producers of government preferred sectors will enjoy increased earnings.
For the Debt Market high deficit of N2trl with planned new domestic borrowings of N850bl offers new investment opportunities, while the plan to rebalance debt portfolio in favour of external borrowing may; reduce domestic issuance of bonds & primary transactions and raise turnover of existing debt instruments.
Panelists at the seminar Mr Bismarck Rewane(CEO, Financial Derivatives), Prof Theophilus Nwokoma(Economics Department, UNILAG), Mr Muda Yusuf(DG,LCCI) and Mr Bayo Rotimi (CEO, Quest Advisory Services-Moderator) agreed that the government beyond the ambitious budget needs to set a clear policy direction that will incentivize private investments into the economy, show commitment in the full implementation of the 2018 budget, ensure that the previous 2017 budget cycle is followed through, legacy debts owed contractors are resolved, prompt release of funds for the 2018 budget and the need for a handshake between fiscal and monetary policies.
Special guest of honour at the seminar and former Minister of National Planning Dr Shamsudeen Usman stressed that “Unless Nigeria gets it politics right, the economy will not work”. He called for close cooperation and understanding between the executive and legislature in achieving a budget that will impact the populace.