The Managing Director/ Chief Executive Officer, Skystone Capital & Investment Ltd., Mr Ola Olabinjo, says opportunities inherent in debt capital should be explored in solving Nigeria’s lingering infrastructure deficit
Olabinjo said at a media parley in Lagos on Tuesday that the quest by the Federal Government to develop critical infrastructure needed to attract investment, growth and development could only be achieved through debt capital financing.
Debt capital is the capital that a business raises by taking out a loan. It is a loan made to a company, typically as growth capital, and is normally repaid at some future date.
He said the nation’s infrastructure needs could not be addressed with yearly budgetary allocations, stressing the need for debt capital financing.
Olabinjo said continued allocation and appropriation in the budget for development of critical infrastructure sector of the economy, amounted to paying lip service to infrastructure development.
“The budget allocation for infrastructure for the 2021 fiscal year is a drop of water in the ocean.
“It cannot maintain the existing infrastructure let alone develop new ones.
“The only way to think out of the box and think afresh is new ways of tackling infrastructure development,” he said.
He said that government as a matter of urgency, must put in place, friendly and attractive business policies that would not be inimical to both local and foreign investors.
Olabinjo said that legal/regulatory framework must be right to attract the needed debt capital for infrastructure development.
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He said that Nigeria could not extricate itself from the infrastructural deficit it found itself with, if it continued to allocate and appropriate funds in the budget for building of roads, development of the educational sector, amongst others.
“We need to reassess and rethink the way we go about financing projects in the domestic economy.
“Debt market is still a major source of financing that can bring back moribund companies,” Olabinjo said.
The investment expert said there was $100 trillion debt fund at zero interest looking for safe environment and opportunities.
He disclosed that Egypt, Morocco and Ghana were already enjoying the funds.
According to him, Nigeria is in a better position to attract these funds due to its population, size and high return on investment.
“Our tax enforcement should be pursued aggressively. Multiple taxation must be jettisoned.
“The issues of our treaty, commercial dispute resolution, stable foreign exchange policy are key issues to be addressed to attract these funds,” he said.
On the company’s drive to help grow the economy through development of small businesses, Olabinjo said it would, early in 2021, bring about six companies to the capital market for debt capital raising.
He said the company would change the narrative of discussion in the area of debt capital financing in Nigeria.
