Finance minister, Kemi Adeosun on Monday raised concerns on the high level of capital market illiteracy in Nigeria, which she sees as another major constraint to deepening market activities, as she urged the Securities and Exchange Commission to raise awareness.
“I think my concern is always that there is a lot of misunderstanding of what the capital market really is. There is a lot of excitement that there is a lot of money in the capital market without really understanding the mechanics of what it will take to unlock it.
“There is a lot to be done on your part around literacy and awareness and stakeholders engagement at every level, especially at political level because I am not sure every minister truly understands what the capital market means for his portfolio,” Adeosun said, speaking on Monday while receiving the capital market master plan committee council in her Abuja office.
She called the ten-year capital market master plan “almost prophetic” in the role it has to play in providing solutions as she pledged the federal commitment’s commitment to help find a way to unlock the potential in the sector.
“I think there is a huge opportunity now to work very closely with you and indeed, a huge need to work very closely with the capital market many of the financial solutions to the nation’s problems seek the capital market
“We need to leverage it, we need to harness it, we need to grow it actually from an economic perspective, if you look at it, every country that has grown economically, there has been dept in the capital market.
She said low level of understanding is frustrating development funding, citing example with the very aggressive plan to develop the nation’s housing sector which the capital market has the potential of handling but for lack of understanding of best ways to go about it.
The minister also pointed out that there is a lot of misunderstanding around huge funds sitting with the Pension Commission that could be tapped but that many lack basic understanding that it is not free money but such that needs to earn a return which in turn will largely be driven through capital market.
“We need to create the instruments, we need to de-risk certain sectors, and we need to look at procedures. At the moment we are working on the physical sustainability plan and one of the things that we are saying to the state government is, we want to stay you away from the banks,” she told the committee.
Adeosun spoke on the discussions she had with the DG SEC on how they can lighten some of those procedures and encourage states that have bankable projects to go to the capital market and access cheaper, sustainable and transparent funds than the banks.
She further observed the need for the capital market to compete with the money market, saying that the process would require being faster at getting approvals, and also be very clear that it is a competitive market.
Olutola Mobolurin, Chairman of the Committee who led the delegation said the visit was to discuss the detailed plan on how government can leverage on the capital market to finance Nigeria’s socio-economic development priority.
His words, “We are here to basically oblige you with what we have done, we have a ten year plan and we believe that this plan is coming at a time that this government can really leverage on the capital market.
“The challenges in the economy, the plan of diversifying the economy, the infrastructural deficit and the giant requirement of financing in the economy especially for longer term projects.
“It requires that we match those plans and those projects with funding of a longer term and the capital market is a natural source for those funds.
