2022 Budget: ACMAN recommends borrowing to FG for self-liquidating projects

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The Association of Capital Market Academics (ACMAN) has urged the federal government to borrow from multinational agencies and fund projects that will be self-liquidating.

ACMAN made their position known through their President, Professor Uche Uwaleke at a press conference on Tuesday in Abuja.

Recall that President Muhammadu Buhari presented the 2022 budget to the National Assembly on Thursday last week with a deficit of about N6 trillion.

According to Prof. Uwaleke, “The 2022 budget proposal has a deficit of over N6 trillion and the government is largely borrowing to fill this huge financial hole.  In view of the present unsustainable high debt service burden, the government is advised to tie future loans to self-liquidating projects.

“Infrastructure financing will continue to pose a major challenge to the government except the private sector is put on the driving seat. We commend the innovative financing schemes proposed in the 2022 budget including the Public-Private Partnerships and Sovereign Green Bonds programme. Nevertheless, we advise the government to take full advantage of opportunities in the Nigerian capital market to address the infrastructure deficit in the country. These include the resort to revenue bonds as well as leveraging the benefits of asset securitization.

“We recognize that part of the 2022 fiscal deficit will be financed through privatization proceeds. However, the amount involved is not significant. The government is advised to identify more suitable assets for partial privatization and execute the process through the capital market. In this regard, we welcome the plan by the government to partially privatize the newly incorporated NNPC Limited through the Nigerian Exchange,” he said.

The Association also called for synergy between fiscal and monetary authorities urging the CBN to continue its accommodative monetary policy stance which has had an effect on the stock market while at the same time tackling the supply-side induced inflation.

Speaking on Nigeria’s legal tender ACMAN said “eNaira project of the CBN and on-going efforts by the apex bank to regulate the Fintech space. However, given the scope of Fintech spanning credit, payments and investment/wealth management, we advise strong collaboration between the CBN and the Securities and Exchange Commission for effective regulation.

“On the recent call for naira devaluation, ACMAN advises caution given the fragilities, structural imbalances and vulnerabilities in the Nigerian economy which is yet to be addressed while calling for the integration of the Nigerian Capital Market Master Plan into the country’s 2021 – 2025 National Development Plan which will position Nigeria for sustainable economic growth and development.

“Our attention has been drawn to statements and reports in the media mischaracterizing as a call for devaluation, the view of Vice President Yemi Osinbajo, SAN, that the Naira exchange rate was being kept artificially low.

“Prof. Osinbajo is not calling for the devaluation of the Naira. He has, at all times, argued against a willy-nilly devaluation of the Naira.

“For context, the Vice President’s point was that currently, the Naira exchange rate benefits only those who are able to obtain the dollar at N410, some of who simply turn round and sell to the parallel market at N570.

“It is stopping this huge arbitrage of over N160 per dollar that the Vice President was talking about. Such a massive difference discourages doing proper but ACMAN also called on National Assembly to speedily consider and pass the Bill so that implementation can commence as expected in January.”

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