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‘FG’s Proposed Fundraising in Capital Market for Varsities Unviable’

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  • ‘FG’s Proposed Fundraising in Capital Market for Varsities Unviable’

The Head of Department of Banking and Finance, University of Lagos, Prof. Rufus Olowe, has said the plan by the Federal Government to raise funds for universities through the capital market is not viable.

President Muhammadu Buhari, who was represented by Vice-President, Prof. Yemi Osinbajo, at the convocation of the University of Ibadan, stated that university education was really being under-funded and that the Academic Staff Union of Universities had a point for its ongoing strike.

He revealed that some of the options that the Federal Government was working on “are the details of education funding for the public universities, which will involve raising funds from the capital market to give a push to the infrastructure in our universities.”

According to Olowe, the planned fundraising will not be viable because the repayment will be tied to the internal revenue of the government and the pressure on government revenue is already very high.

He said, “The government has in the past raised so many bonds and there is a heavy commitment on the part of the government because it has too much debt. Adding another one for the universities will further increase the already heavy debt portfolio of the government.”

He added that another reason he described the project as unviable was that “the capital market is commercial, and universities are not run fully on a commercial basis.”

The Managing Director, Afrinvest Securities Limited, Mr Ayodeji Ebo, said he did not think the repayment would be a problem.

He said the challenge the government had been having was high recurrent expenditure, which could be controlled.

Ebo described the proposed fundraising as a wise decision, saying it was targeted at a specific sector.

He stated that it would have a long-term effect on the economy in terms of building quality human capital as well as deepening the capital market, adding that it would be a win-win situation for both the government and the capital market.

Ebo said, “Government should adopt more of these targeted borrowings as it can easily be traced and the effectiveness can easily be measured.

“We have always been saying borrowing is not bad on its own, but where it is directed to. The educational sector needs a serious intervention, and if the proceeds can be channelled effectively, we will see the effect in terms of improving the quality of the output of our educational system.”

He noted that the fundraising would be successful as long as returns were guaranteed because “there exists a huge appetite for debt in the Nigerian capital market.”

“This is what we have all been clamouring for; it will create more products for the capital market, in addition to the Sukuk and infrastructure bonds, among others,” Ebo added.

The Vice-President, Association of Stockbroking Houses of Nigeria, Mr Akinsola Akeredolu-Ale, said, “It is a welcome development for the long-term planning and continuity in the funding process for our educational system.”

The Chief Executive Officer, Financial Derivatives Company, Mr Bismarck Rewane, described the educational sector as a good business opportunity.

He, however, added that he could not understand how and why the Federal Government decided to take such a decision with the current delicate state of the capital market.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Finance

Stanbic IBTC Obtains Approvals, License to Establish Life Insurance Subsidiary

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Stanbic IBTC Holdings Plc on Friday announced that it has obtained all required Regulatory Approvals and a license from the National Insurance Commission to establish a wholly-owned Life Insurance subsidiary, Stanbic IBTC Insurance Limited (SIIL).

In a statement signed by Chidi Okezi, Company Secretary, Stanbic IBTC and released on Friday, the bank said “The establishment of this new subsidiary essentially complements the bouquet of product offerings by Stanbic IBTC as it continues its goal of being the leading end-to-end financial solutions provider in Nigeria. In this regard, SIIL will aim to facilitate long term insurance for already financially included individuals and will seek to become the preferred Insurer in the Life Insurance Business.

“Stanbic IBTC Holdings PLC, a member of Standard Bank Group, is a full-service financial services group with a clear focus on three main business pillars – Corporate and Investment Banking, Personal and Business Banking and Wealth Management. The group’s largest shareholder is the Industrial and Commercial Bank of China (ICBC), the world’s largest bank, with a 20.1% shareholding. In addition, Standard Bank Group and ICBC share a strategic partnership that facilitates trade deals between Africa, China and select emerging markets. Standard Bank Group is the largest African financial institution by assets. It is rooted in Africa with strategic representation in 21 countries on the African continent.

“Standard Bank has been in operation for over 158 years and is focused on building first-class, on-the-ground financial services institutions in chosen countries in Africa; and connecting selected emerging markets to Africa by applying sector expertise, particularly in natural resources, power and infrastructure.”

 

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World Bank to Discuss New $1.5 Billion Loan Request From Nigeria

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The Finance Minister, Budget and National Planning, Mrs. Zainab Ahmed, on Friday said the Federal Government has met all the conditions for a fresh loan of $1.5 billion from the World Bank.

The minister disclosed this on Bloomberg TV.

She said the multilateral financial institution is in the final stage of approving the loan. The minister explained that the loan will be discussed in the bank’s next meeting and possibly be approved in the same meeting.

In June, the Senate approved the borrowing plans but the World Bank pushed back demanding Nigeria fulfill the conditions attached to the $3.4 billion loan received from the International Monetary Fund (IMF) in May.

Some of the conditions were to increase revenue generation by upping VAT, the introduction of tariff reflective electricity bill, the removal of subsidy and the unification of the nation’s foreign exchange.

Most of which the Federal Government has done despite protests from most Nigerians who called the new policies anti-people given their current situation.

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Nigeria Realises Over N400 Billion from Company Income Tax in the Third Quarter of 2020

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The Federal Government realised N416.01 billion from Company Income Tax (CIT) in the third quarter of the year, according to the latest report from the National Bureau of Statistics (NBS).

This was 3.48 percent higher than the N402.03 billion generated in the second quarter of the year and represents a decline of 20.13 percent year-on-year from N520.89 billion realised in the third quarter of 2019.

A breakdown of the report showed the professional services sector including the telecoms generated the highest amount of CIT at N55.52 billion during the quarter, while the manufacturing sector followed with N42.03 billion.

The banking and financial institutions realised N24.05 billion while the mining generated the least and closely followed by Textile and Garment Industry and Local Government Councils with N120.93 million, N167.51 million and N321.72 million generated, respectively.

The report added that out of the total amount realised during the quarter under review, a sum of N244.70 billion was generated as CIT locally. The federal government collected N70.34 billion as foreign CIT payment and the remain N100.97 billion was received as CIT from other payments.

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