Infrastructure: Capital market funding better than external loans, say experts

Stockbrokers have cited the benefits of raising funding for infrastructural projects in the capital market by the Federal Government over the opting for external loans amid consecutive borrowings.

A stockbroker and economist, Mr Bade Adeshina stated that the Federal Government should opt for capital market financing for infrastructure projects stating that foreign loans were attached with currency risks and uncertainty.

He said to our correspondent during an interview at the 25th Annual Conference of the Chartered Institute of Stockbrokers held in Lagos that FG should opt for the cheaper option of the capital market.

He said, “Basically, the best vehicle for financing infrastructure projects is the capital market because of the cheap nature and the support rather than borrowing that money outside that is attached with a lot of foreign exchange risks. If you look at the Nigerian economy today, you never can tell how the pricing of the naira will be against the dollar and that will have a wider implication on our infrastructure financing.

Another stockbroker, Mr Rotimi Fakayejo, also said that capital market funding was better and more reasonable for the government.

He however said the downside was that the government might not be able to raise such an amount of funds from the capital market easily.

He said, “We are talking about N2tn when almost all the pension fund is already locked in investment in government securities.”

Meanwhile, during his keynote address at the event, The President and Chairman of Council, CIS, Mr Olatunde Amolegbe, said that the conference and other workshops held by the institute were geared towards achieving significantly increased economic activity nationwide using “a strong, inclusive and efficient capital market as an essential tool.”

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