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One of Nigeria’s leading Asset Management and financial advisory firms, FSDH Merchant Bank, has advised the Federal Government to issue zero-coupon bonds.

In its monthly economic and financial markets outlook titled “Economy in need of boosters: Priorities for a second term” FSDH claimed that there is an urgent need for the Federal Government to manage the high-interest expenses on its debt relating to its current revenue.

“In order to manage the high-interest expenses on the debt of the Federal Government relative to its current revenue, it should consider the issuance of zero-coupon bonds. Such bonds and other bond issue going forward should be tied to specific projects that have economic value addition to the country. And there should be a mechanism to assess that debt contracted is used for intended projects.”

Meanwhile, the report quoted available figures from the Central Bank of Nigeria (CBN), which showed that Nigerians spent a total of $33.04 billion between 2009 and 2018 as personal travel expenses on education and health-related issues. This amount increased the demand pressure in the foreign exchange market, the report said.

This could have been avoided: According to the FSDH, if Nigeria’s health and education sectors were well funded, the amount spent between 2009 and 2018 could have been saved.

The financial advisory firms also maintained that there is a need for developments of the solid mineral sector in Nigeria in order to expand the revenue base of the country and also earn more foreign exchange.

Way forward: For FSDH, there are untapped opportunities in Nigeria’s mining sector. This is why FSDH Research recommended a model whereby the Government could partner with the private sector to invest in the exploration of the sector. After gathering adequate data on the available reserves, the Government could then sell mining licences to private companies.

“Development of the solid minerals would also help boost the economies of the states of the federation since all of the states in the country had at least one solid mineral.” 

The report added that the Government should reintroduce tolls on the federal highways in order to source funds for road maintenance across the country.

The FSDH also said the Government should consider crude oil swap arrangements with construction companies either local or foreign, for road or rail construction across the country.

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