Cross River appreciates SEC’s public enlightenment on capital market
Speaking at the opening ceremony of a three-day public enlightenment workshop organized by Sec in conjunction with the State Government on opportunities in the capital market for the development of the state over the weekend in Calabar, the state Governor said the people are grateful to SEC for the innovative and noble programme (enlightenment) intended to accelerate economic growth and development of the state.
The workshop, according to the Governor, who was represented by the Secretary to the State Government (SSG), Fidelis Ugbo, exposes major stakeholders in the state to abundant potentials and benefits of the market as an alternative source of funds for financial development of projects as well as to encourage local entrepreneurs in the state to utilize the facilities of the market to develop and expand their businesses.
"No doubt the dearth of entrepreneurial capital investment has always been the bane of our economic and industrial activities. The focus of the workshop will better be appreciated when one considers the cost and burden of securing money market funds for sustained economic development and planning" the Governor stated.
He added that the Cross River State as an emerging growth economy has benefited from the activities of the capital market, adding that the N4 billion 2004/2007 First Cross River State Floating Rate Redeemable Tourism Development Bond was floated through the capital market for the upgrading of the Obudu Ranch Resort to international standard. "This project was completed and accordingly commissioned by the President of the Federal Republic of Nigeria, Umar Yar’Adua in October 2007.
He disclosed that the state was proud that the debt was serviced without default and on due dates with the last installment being paid in November 2007, adding that "Capital market plays a major role in the life of developing economy like ours and we are very much interested in the better understanding of the actual and potential benefits of having an organized capital market"
Corroborating him, the state’s Finance Commissioner, Rosemary Achonwa said the state was grateful and fully appreciative of the role of the capital market in economic development, more as the government has tested the collaboration of the market.
"We are a tourist state with capital intensive project funds needed to add value to our tourism drive. In this regard, the capital market was approached and the 1st Cross River N4 billion Floating Rate Redeemable Tourism Development Bond 2004/2007 was floated" the Commissioner explained.
She reaffirmed that the financed option provided by the capital market will be finally liquidated by end of November, 2007 as no payment default has been recorded by the state government.
She declared that major projects financed from the bond proceeds included animal husbandry (dairy farm) at the Obudu Ranch, honey production factory (in the ranch) and presidential retreat at the ranch. Others listed by the Commissioner are Marina Resort Calabar, Skywalk, Stone works, amusement arcade, Bebi airstrip run way/overplay and nards, road and car park works, rapid response fire vehicles, telecommunication and satellite cable, golf course, cars/tour boat/clinic and equipment.
She added that these are positive indications and attractions from the capital market.
Speaking earlier, the Director-General of SEC, Musa Al-Faki in his keynote address said the market is indispensable for economic growth and development. He explained that Cross River State, being one of the states endowed with abundant natural resources and tourism potentials can harness her resources through funds sourced from the capital market.
The Director-General whose address was delivered by Sylvester O. Akele, Director (Research and Planning) SEC, said the tourism industry which has given the state a global recognition and attraction and its vast agricultural potentials can be given further boost through funds sourced from the market. For instance, he disclosed that the state can use its vast agricultural lands and the well known oil palm produce from the state to boost its revenue.
The state, according to the SEC’s boss, is equally blessed with outstanding tourism potential including the Obudu Ranch resort, Tinapa project, Ikom Monoliths, Kwa and Agbokim waterfalls, the old residency museum, Mary Slessor Memorial Tomb and Seasonal Calabar cultural carnival etc. "For these to happen, the state, local governments and entrepreneurs have to know how to access the capital market for long term funds that can be used to re-activate and develop these resources" he noted.
Explaining further, the DG, SEC disclosed that over the years, states and local governments have had the problem of project-financing mismatch that is, financing projects of long gestation periods with short-term funds, mainly borrowing from the commercial banks with attendant high interest rates.
"Hardly do these projects reach their gestation periods before the banks begin to knock on the doors for re-payment of these funds. This has led to higher incidences of uncompleted and abandoned projects that litter the landscape of many states today" the DG declared.
He went on that states and local governments nationwide are today faced with very serious challenges of providing necessary economic and social needs to their people while the funds available for the realization of these dreams continue to dwindle, adding that, statutory allocations are becoming leaner by the day in the face of great demands for developmental infrastructure while internally generated revenue sources in some cases have been overstretched.
He added that the challenges are increasing and opportunities seem to be shrinking while the problem has been that the states/local governments and industrialists know very little about the opportunities in the market. He immediately noted that "We have come here to inform you that there is hope through the opportunities offered by the capital market"
Al-Faki said the state was fortunate to be among those who had used the market to finance projects in the past. "The state made initial forays into the market in 2004 when it raised N4 billion to expand and upgrade the Obudu Ranch Resort. The result and impact are there for everyone to see as testimonies"
Other states, according to the DG of SEC have benefited immensely by accessing the market. They include Ekiti State which raised N4 billion in 2002 to finance the construction and rehabilitation of some of its urban and rural roads, establishment of palm plantation, rural electricity and expansion of water projects, Yobe State raised N2.5 billion in 2001 to finance urban roads, houses and drainage improvement and Lagos State which raised N15 billion in 2003 to re-finance short-term facilities obtained from banks to fund development project. Other states listed by him include Edo state which raised N1 billion and Delta state which raised N5 billion, all for infrastructural development.
He also explained that, the state can also provide a number of benefits to small scale indigenous companies through the promotion of Capital Trade Points (CTPs) which are mini-exchanges aimed at giving small indigenous companies the opportunity to raise the necessary capital required for their operations within the localities while it can also take advantage of having the branch of the Stock Exchange in the state.
He concluded that opportunities that abound in the capital market for the purpose of investment and wealth creation are enormous. "Bond could be floated by governments for the purpose of creating socio-economic structures such as roads, electricity, markets, bridges etc. small and big companies in the state can enhance their prosperity by raising equities or debt related instruments while high networth entrepreneurs can participate in venture capital related investments to turn around moribund enterprises.
These activities are indeed clear paths towards economic prosperity for Cross River State"
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