Stockbrokers on the Nigerian Stock Exchange have called for more issuance of fixed income securities by the government to finance infrastructure deficit.
They described the recent over-subscription of Sukuk Ijarah, issued by the Federal Government, as a clear demonstration of the market’s absorptive capacity.
The National Integrated Infrastructure Master Plan had estimated that a total investment of about $3tn will be required over a period of 30 years to build and maintain infrastructure for Nigeria.
The Federal Government recently floated a N150bn Sukuk Ijarah, a financial instrument for ethical investors that provides regular bi-annual tax-free payment with a seven-year maturity
The Sukuk instrument was oversubscribed in excess of 400 per cent.
The President, Chartered Institute of Stockbrokers, Mr Olatunde Amolegbe, in a statement urged the Federal Government to leverage such an instrument to mobilise fund to revive Nigeria’s ailing industrial base.
He said the Federal Government should increase the pace of issuance of such an instrument as the market had demonstrated its capacity to absorb such issuance.
“The Federal Government should increase the pace of issuance of such an instrument as the market has demonstrated its absorptive capacity, given the over 400 per cent over subscription letter of the last Sukuk,” Amolegbe said.
The Managing Director, Global Asset Management, Mr Babatunde Sobamowo, also said that Sukuk was becoming famous for its structure as an investment vehicle being used by the Federal Government.
Sobamowo stated that the instrument could boost implementation of the government’s Economic Recovery and Growth Plan.
He said, “Sukuk confers on the subscribers ownership of the assets being financed, which in most cases are for ethical purposes. In recent times, they are used to finance roads, railways and other infrastructure which are lacking in the country.
“They will serve as catalyst to the much needed development to boost our industrial and agricultural growth, which will impact positively on our GDP as clearly spelt out in the ERGP.”
“In order to ensure probity in the management of these underlying assets, it is advisable that Project Management Offices are opened in all the sites where these funds are being deployed,” he added.
Sobamowo noted that Sukuk bond would afford all stakeholders to have an on-the-spot assessment of the projects and the expected cash flows to be generated in paying the rental incomes due to the subscribers.
