The Director-General of the Debt Management Office (DMO), Ms. Patience Oniha, disclosed on Thursday that the Federal Government planned to borrow N1.6 trillion to fund the 2019 budget.
Oniha, who made the disclosure at the Association of Issuing Houses of Nigeria’s semi-annual business lunch held in Lagos, said government had been reducing its level of new borrowings recently, dropping from N2.2 trillion in 2017 to N1.6 trillion in 2018.
According to her, the projected N1.6 trillion borrowed funds will from local and international lenders on 50:50 spread.
On the allegation that government was crowding out the organized private sector from the debt market, Oniha debunked the claim saying that on the contrary, government’s borrowing approach is not constituting barrier to involvement of the private sector in the market.
She clarified: “There are issues around getting sub-nationals and corporates to come to the market. Corporates prefer to borrow from banks because it is faster and has lower risk than the debt market.
“In order for us to get these people to come to the market, we have to go back to the drawing board and plan how to tackle these issues”, Oniha maintained.
In her remarks at the forum, the Executive Secretary of the Nigerian Investment Promotion Commission (NIPC), Ms Yewande Sadiku, charged capital market operators to take on the role of driving the debt market in order to attract huge investments to critical sectors of the economy.
She said: “We cannot attract capital and investment if we do not address key structural issues. Infrastructure is necessary and should be addressed. There are also material sectors that the government needs to hand over to the private sector.
“We are currently attracting investment into sectors that do not bring big numbers. As capital market operators, it is our duty to tell the government what to do; we cannot longer sit and watch. It falls down to the government to address these issues with urgency”, the investment expert added.
Some analysts who spoke at the event identified the challenges of the nation’s economic structure as creating hurdles for sub-national governments and corporates’ participation in the debt market.
For instance, the Chief Executive Officer, FMDQ OTC Securities Exchange, Mr Bola Onadele, pointed out that the crowding out of the sub-national governments and corporates occurred as a result of the failure of most state governments to come to the market to raise critical funds for development.
