Capital Market Summit to Explore New Funding for Local Governments
By Patience Ikpeme
Nigeria is exploring new avenues for funding local government infrastructure through the capital market, including municipal bonds and Sukuk.
The Senate Committee on Capital Market and Institutions disclosed that these instruments offer a sustainable, market-based alternative to traditional funding.
The Chairman of the Senate Committee, Senator Osita Izunaso, made the statement ahead of a national stakeholders summit on Municipal Bonds and Sukuk for Local Government Infrastructural Development in Uyo, Akwa Ibom State.
The summit, with the theme “$1 Trillion Nigerian Economy: Infrastructure Financing through the Capital Market,” will gather key players from government, regulatory bodies, investors, and the private sector.
According to Senator Izunaso, empowering local governments through the capital market will help to reduce their reliance on federal allocations. He said this will promote fiscal independence, create jobs, and accelerate Nigeria’s progress toward its target of a $1 trillion economy.
The Director-General of the Securities and Exchange Commission (SEC), Dr. Emomotimi Agama, also commented on the initiative, stating that Nigeria’s infrastructure gap requires capital market solutions. He said that bonds and Sukuk provide long-term funding and stable investor returns.
“Infrastructural gap in Nigeria can be met effectively through Capital Market Funding,” Dr. Agama said, adding that the summit is a way to raise awareness among stakeholders about the benefits of municipal bonds and Sukuk.
He explained that bonds are long-term debt instruments that help governments and corporations raise funds for development projects and business expansion, while also providing a stable outlet for investors.
Dr. Agama noted that the Nigerian bond market has become more popular as governments and corporate institutions have used it to raise funds for crucial projects. He said that given the “paucity of revenue to finance necessary developmental infrastructure and services,” governments at all levels need to take advantage of the opportunities available in the capital market.
The summit’s main goal is to explore how to build a strong municipal bond and Sukuk market to support local government infrastructure. By bringing together stakeholders, the event will: Educate participants on the benefits and potential of these financing tools; identify and address the challenges local governments face in accessing capital markets; create a comprehensive strategy for developing a well-functioning market that is adaptable to Nigeria’s local government framework; and promote collaboration among government agencies, financial institutions, and investors to create a sustainable financing ecosystem.
The organizers hope the summit will also provide actionable policy recommendations and regulatory reforms that will facilitate the issuance of municipal bonds and Sukuk by local governments.
