FBNQuest has seen the possibility of growing the real estate sector through bond investment.
In a statement, it said infrastructure deficit has remained an impediment to the industrialisation and diversification of the economy.
Infrastructure deficit, it added, has further complicated the ease of doing business in the country and is linked to inadequate public sector financing.
“By its nature, infrastructure is usually capital intensive. In view of this, the Nigeria Mortgage Refinance Company Plc (NMRC) was set up to bridge the funding cost of residential mortgages and promote the availability, as well as the affordability of good housing to Nigerians by providing increased liquidity in the mortgage market through the mortgage and commercial banks,” it said.
Given stricter capital adequacy and liquidity regulations for the banking sector, banks have reduced lending to infrastructure. Moreover, the huge financing requirements for infrastructure cannot be provided by banks alone. Consequently, capital markets, which have pools of long term funds, can provide the required financing for infrastructure. Capital markets experts have restated their calls on government at various levels to take advantage of the multiple benefits inherent in the nation’s capital market to facilitate their respective infrastructure projects.
According to Head, Debt Capital Markets, FBNQuest Merchant Bank Limited, Oluseun Olatidoye, the Federal Government can tap into the capital markets to fund, using infrastructure bonds and other long term debt securities for the development of various infrastructure such as housing and urban development. This will enable the government to free up cash to be used for public goods.
He stressed that most infrastructure financing through the capital markets involve active participation of private sector operators, which enhances the construction and utilisation process, given the private sector participants’ drive for efficiency and increased productivity.
For instance, over the last two years the FBNQuest Merchant Bank Limited has supported the Federal Government in developing road infrastructure by issuing N200 billion Sukuk, dedicated to rehabilitation and construction of roads across the six geopolitical regions.
The completion of these roads will significantly improve transportation, open up access to hinterlands and enable the agriculture sector by giving farmers and Agripreneurs access to markets.