Banking sector overstretched with govt borrowings - NESG

The chief executive officer of the Nigeria Economic Summit Group (NESG), Mr Laoye Jaiyeola, is worried that the banking sector is being overstretched due to governments’ borrowing.

Mr Jaiyeola, who stated this at a meeting with the Securities and Exchange Commission (SEC) in Abuja, urged governments and corporate organisations to look towards the capital market for their funding needs.

To build collaboration, he noted that transactions could be restructured to raise bonds, bills and all of those things that would fund whatever it was that needed to be funded without going through banks.

He said, “The securities market needs to take the bull by the horns otherwise we are going to be in perpetual debt as a nation, and that will not help us.

“That is one of the reasons we say let’s re-engage; how can we get an Investments and Securities Act (ISA) that will ensure that the needed funding for development in Nigeria is given priority and then we can fund Nigeria for a longer term.”

The director general of SEC, Mr Lamido Yuguda, said the capital market could actually do more in the areas of provision of necessary infrastructure for the country in a bid to support the government in its developmental effort.

He

said,

“Our

collective economic power is bigger than the government, and in many countries, you find out that the capital market is actually funding the government. When you save, the finance is used to create economic value that actually enhances your standard of living, and this is a win-win. You get financial returns and also get utility from the investments, and this is actually achievable.”

Mr Yuguda welcomed the collaboration with the NESG, saying both organisations could do more for the economic development of the country.

The executive commissioner, legal and enforcement at SEC, Mr Reginald Karawusa, stated that the current ISA was signed into law by then President Umaru Musa YarÁdua in 2007.

Mr Karawusa said the SEC set up an industry-wide committee to rework the law, adding that several market experts were involved in redrafting the law, as well as inputs from stakeholders.