The Capital Market Is the Primary Tool to Bridge Nigeria’s Infrastructure Finance Gap – FBNQuest

Kayode Akinkugbe, the Managing Director FBN Capital Limited, a part of FBNQuest, has highlighted that the commercial banking community alone cannot meet the requirements for Nigeria’s infrastructure financing.

He made this known as part of a panel on “The Nigerian Capital Market: A Catalyst for Change” during the 2015 Business Luncheon of the Capital Market Solicitors Association (CMSA) which recently held at the Civic Centre in Lagos.

The Capital Market Is the Primary Tool to Bridge Nigeria’s Infrastructure Finance Gap – FBNQuest LtR Mr Kayode Akinkugbe, MD FBN Merchant Bank_ Mrs Yinka Edu, Capital Market Solicitors Association (CMSA), and Mr. Michael Oyebola, MD, FBN Capital Asset Management.

Speaking at the event, Mr. Akinkugbe stated, “Nigeria is at a point in its development where the issue of infrastructure has become extremely critical. Our infrastructure deficit requires us to invest around 30 billion dollars a year for the next decade to catch up. The financing requirements are far much more than what the commercial banks can cope with. There is therefore a clear gap, and the right segment of the financial market to fill the gap is the capital market”.

Mr. Akinkugbe explained however that strengthening liquidity in the capital market is very crucial, especially for confidence. If we have counter parties that have strong capital, there will be much more activity in the capital market. Currently, we really don’t have a lot of well capitalized institutions. Being well capitalized means you can make investments in distribution. He submitted that to make the investments that are required, properly capitalized institutions are needed.

From a regulatory perspective, Ms Tinu Awe, Head Legal and Regulations, Nigerian Stock Exchange expressed that there are three paradigm adjustments that needs to be made within the Capital Market industry. Firstly, operators need to collaborate together to challenge the status quo of the financial market. Secondly, regulators need to take a look at themselves and develop some sort of ‘regulators code’ to guide the execution of their oversight functions. Finally, operators must show greater willingness to be regulated.

“The nature of engagement of the capital market with the various stakeholders needs to be looked at,” Mr Akinkugbe surmised. “There needs to be a different model for engaging, particularly with the public sector. The way the bankers and the Bankers Committee for example, have built relevance in the national dialogue and with the presidency is an approach that needs to be considered in the capital market community. Also how we develop the buy-side in the country is critical, as the banking sector still dominates in terms of financial assets that are managed. We need to look for ways to try and mobilize savings by looking more to collective investment schemes for instance.”

FBNQuest featured as a co-sponsor of this year’s edition of the Capital Market Solicitors Association Business Luncheon. The CMSA is an independent self-regulatory body of solicitors and commercial law firms engaged in capital market practice in Nigeria, and the business luncheon is its flagship event organized to discuss topical issues and pragmatic ways to develop the capital market. The event, now in its 13th year, drew participants from the capital market community, including legal practitioners, regulators, issuers, investment bankers, stockbrokers, trustees and registrars.

In September 2015, FBN Capital Limited, a part of FBNQuest, was recognized as the 2015 Best Africa Investment Bank by the Africa Investor Group. The firm has also received the award for Best Investment Bank in Nigeria 2015 by Global Finance Magazine for the fourth consecutive year, and the World Finance Banking Award for the Best Investment Bank in Nigeria 2014.


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