Oteh: Capital Market Critical to Achieving Transformation Agenda
The Director-General, Securities and Exchange Commission (SEC), Ms Arunma Oteh Wednesday said that the capital market is critical to providing the much-needed medium and long term financing for infrastructure, agriculture and mortgages- three key pillars of President Goodluck Jonathan's transformation agenda.
She said the commission is currently working on improving the quality of securitised assets to provide low cost funding and boost investor-confidence in the market. This, according to her, is also expected to draw affordable funding into critical infrastructure.
Speaking to journalists in Abuja at a workshop on Securitisation, Mortgage-Backed Securities, Covered Bonds and Liquidity Facility which was titled: "Securitisation: A Panacea for Deepening the Nigerian Capital Market", she said the product (securitisation) offers an opportunity to ensure " you can do more than what is available from the budget of the federal government."
Specifically, she described as shocking the fact that only about 20,000 mortgages were presently on the books of the banks in spite of the huge population.
Oteh, also hinted that the federal government in partnership with the World Bank Group is planning to launch a Mortgage Refinancing Facility to lower the cost of raising medium to long term financing.
She said: "As we prioritise housing finance for Nigerians, it would be necessary that we develop mortgage backed securities in the country."
The programme facilitator, Prof. Graham Penn said securitisation could solve the country's financing needs.
He said: "Transactions would have to be rated by independent agencies; they would review the quality of the underlining assets that back the securities: which would give real confidence to the investors as to the likelihood of repayment.
"That, at the end of the day, drags the cost of funding down; which is what Nigerians need. It is medium term funding and attractive competitive pricing. What we are trying to do is to provide a formal security which is collaterised by assets of real substance that have been independently verified and will give investors likelihood of repayment."
Meanwhile, the SEC DG expressed satisfaction with the product which had been aimed at repositioning the Nigerian Capital market into a world class status.
She said: "We are happy that there's a greater recognition in the country about the importance of capital market particularly in providing medium to long term finance. We believe that it is very critical as we were trying to build up a world class capital market, we must have the gammot of products that you must have in a world class market."