Major players in the Nigerian capital market moved a step further to assert its relevance as a major pillar in the nation's growth and development, especially as it relates to transforming into a major economic giant- becoming one of the 20 biggest economies by the year 2020.

Ahead of this broad vision that has become the singsong of the Central Bank of Nigeria in recent months, the capital market chiefs- regulators and operators working as one, are working at actualising the seven-point agenda of the administration of Umar Musa Yar-Adu'a. These include a deliberate focus on power and energy; mass transportation; food security and agriculture; wealth creation and employment; quantitative and functional education; security; and land reform.

So when stakeholders in the capital market, including top officials of the Securities and Exchange Commission; Nigerian Stock Exchange; and Association of Issuing Houses of Nigeria (AIHN), gathered at the cozy Transcorp Hilton Hotel & Towers, Abuja, for two days last week, it was to brain-storm on how best to fast track the bid to transform Nigeria's economy five years ahead of the FSS 2020 target.

As would be expected, aside major players in the capital market, the gathering also attracted officials from government cycles, especially the Finance Ministry and National Assembly.

In an overview of the benefits of the seven-point agenda, Mr. Kayode Falowo, chairman of AIHN as well as the Implementation Committee of the National Conference, listed benefits derivable from effecting the agenda to include ensuring "Nigeria's ability to develop as a modern competitive economy and with an industrial base by the year 2015. This is apart from developing massive domestic and commercial outputs and technological knowledge transfer to farmers, creating a modernized industrialized Nigeria and encouraging greater exploitation of the agriculture and solid mineral sector to expand its revenue base. The seven-point agenda, he believes, is capable of diversifying the country's source of wealth creation, thereby avoiding continued dependence on petrol, all in a bid to alleviate poverty in the land.

The need for a private-public sector partnership for the agenda to move beyond the purview of the usual talk shop, aware of the enormous cost involved that cannot be funded from budgetary allocations alone, he told the gathering, has made it imperative for the capital market to become involved for the good of all.

According to him, such involvement by the private sector to finance the seven-point agenda would ensure the "imaginative use of capital market instruments." This, in essence, would ensure that the measurement gauges of the market would soar significantly in the coming months and years.

Falowo listed factors critical to the success of the government's dream to include peace and political stability in the country; funding capacity (judging by the positive response of the market to the government's economic reforms agenda post-banking consolidation); law and order (renewed hope in the judicial system following which people now seek redress in court rather than resort to self-help); transparency in governance; quality of human capital; and change agents.

Falowo, who is chief executive of Greenwich Trust Limited, noted that the decision to finance government's initiative through the capital market is not in any way novel, judging by the success so far recorded in this regard in other climes.

While linking the inadequate power supply situation in Nigeria directly to its socio-economic well-being, he lamented that unlike in other organised environment where power projects are funded through the private sector, the government continues to pump funds into power supply without commensurate performance.

For example, he pointed to India Infrastructure Development Finance Company's plan to list $1.25 billion fund to modernise its power plant later this year, just as North America's Starwood Energy Group Global, which will target investments in generation and transmission assets, closed its first energy fund after exceeding its target $33 million to close at $433 million. He lamented the very low per capita power generation in Nigeria, when compared to the situation in the US and South Africa.

The U.S. Federal Government and some municipals, according to him, introduced innovative tools to help states and municipalities finance transportation projects using the Grant Anticipation Revenue Vehicle and the Transportation Infrastructure Finance and Innovation Act. While the first enables states and public authorities to issue debt-free financing instruments like bonds to pay for current expenditures on transportation construction projects and repay the debt using future Federal apportionments, he noted that the other provides assistance to projects with repayment streams like tolls or other dedicated funding sources and create improved access to capital markets.

He thereafter gave several examples of how the capital market has been used to finance projects including roads, monorail, airport and education through issuance of bonds ranging from10 to 40-year tenor, including the 2005 first by the Anglican Communion, which in 2005 floated a six-year N100 million debenture to finance hostel accommodation in one of its university.

While agreeing with the submission of Falowo, Mr. Remi Babalola, Minister of State for Finance, noted the macroeconomic stability in government in the past nine years, as a result of which Nigeria has witnessed improved performance. This has manifested, he said, in a deeper capital market, stronger banking system, robust external reserve, sound current account position, prudent management of fiscal and monetary policies, of which "reflect a positive outlook and an exciting future."

"In 2007 alone, the non-oil sector rose by 9.8 per cent, reflecting the impact of reforms already embedded, which we commit to deepen. Globally, it is agreed that these positive developments are conducive to, and supportive of a good private sector growth," he said.

"I wish to reassure all local and international investors that the administration will continue to provide the enabling and exciting environment that will ensure that Nigeria becomes an investor's haven."

The seven-point agenda, he said, was initiated to identify the priority areas needed for national development and to actualise the Millennium Development Goals and the Vision 2020 agenda.

About 10 million jobs and a double-digit Gross Domestic Product (GDP)growth rate, he projected, are to be achieved through the agenda between 2008 and 2011.

"The seven-point agenda seeks to improve the lives of all Nigerians by focusing attention on: the provision of critical infrastructure required for national development, focusing attention on the Niger Delta in holistic manner that will resolve the various issues, and ensuring food security.

He enjoined the private sector to harness this positive outlook of the nation's economy and make remarkable contributions to the achievement of the economic agenda of government.

The Minister stressed that the capital market "is one of the most important economic sectors that would drive the actualisation of the NV 2020," in the mobilisation of local and foreign direct investment for financing economic growth and development.

He expects that this would raise the nation's market capitalisation as a percentage of Gross Domestic Products, which is still low and lagging, noting the "urgent need to evolve comprehensive measures to strengthen, broaden and deepen the market to enhance its inter-mediatory role in financing economic development."

The occasion, according to Babalola, offered an opportunity to continue his clamour for private-public sector partnership projects, while lending support for such initiatives as the ultra-modern Murtala Muhammed Airport 2 and the ongoing development on Lekki Expressway, among others.

"Hopefully, in the next few months, the PPP legal/regulatory framework will be published. This will state the project areas of interest, the bidding and approval processes, among others."

Director-General of the Securities and Exchange Commission, Musa Al-Faki, stressed the readiness of the capital market to provide a platform for mobilisation of investments into critical areas of the seven-point agenda, particularly power.

According to him, market capitalisation has grown from N2.11 trillion (US$15.96 billion)in 2004 to N13.294 trillion (US$114.3 billion)by December 2007 while market capitalisation as a percentage of Gross Domestic Product (GDP)rose to 50 per cent in 2007 from 18.5 per cent in 2004.

He attributed the poor state of infrastructure in the country to inconsistent policies, poor funding, and weak legal and regulatory environment which, according to him, discourage private sector participation.

"Nigeria needs massive investment in infrastructure over the next couple of years. These investments are expected to come through public private partnership (PPP)initiative," he added.

Babalola wants capital market stakeholders to leverage on the nation's improved credit rating to develop long-term bonds for financing critical sectors like power, energy and solid minerals, among others.

The sector reforms and revenue generating capacity of these sectors, according to the Minister, who was until his appointment an executive director of First Bank of Nigeria Plc, "should make such bonds attractive to local and international investors. For instance, power plants in the Philippines and Thailand were largely financed through the issuance of bonds"

He suggested that the capital market should "explore securitisation financing, structured in tranches of senior and subordinated notes to fund our transportation, education and housing sectors."

It is also possible, the Minister believes, to finance these sectors with syndicated loans and equity-linked development bonds.

Falowo believes that the capital market can play critical roles in helping to actualize the government's seven-point agenda in areas such as sovereign and municipal bunds that ensures that while the private sector provides funds to develop infrastructure, government resources is earmark for other social needs. There are also- the equities market; asset backed securities; real estate investment trust scheme (REITS); private equity fund; corporate bonds; venture capital; and mutual funds, depending on the nature of funding required.

These options, Prof Ndi Okereke-Onyiuke, director-general of NSE notes, provides government with a mix of financial instruments that can enhance government's ability to access cheap capital, as against the previous practice of using ways and means to finance its plan "because such action will cause inflation and macroeconomic imbalance in the economy."

"Our market's absorptive capacity has been tested and it is now clear that there is no amount of fund that cannot be sourced from the market," she enthused, pointing to the huge success in the banking consolidation exercise as a testimonial.

Noting that financing the seven-point agenda through the capital market is a win-win affair for all, the DG explained "with a market capitalisation of about N13 trillion, "our market is grossly under-utilised relative to its installed capacity."

She explained that while government will raise huge amount of money cheaply, listing of the securities would significantly deepen the capital market, which according to her has the infrastructure to cope with more instruments that serve various investor groups.

Okereke-Onyuike pointed to the extremely low risk profile of government related instrument and challenged operators to return to their drawing board to create more financial instruments "whose assets classes would enhance fund raising opportunities for the seven-point agenda."