The Lagos Chamber of Commerce and Industry (LCCI) has recommended the option of equity financing to tackle the nationโs budget deficit instead of embarking on unending borrowing spree.
President, LCCI, Dr. Michael Olawale-Cole, who gave the charge in Lagos, yesterday, at the Chamberโs fourth quarterly media briefing on the state of the economy, also called for the trimming down of tax and duty waivers, and blockage of revenue leakages.
Speaking to the media in Lagos Thursday on the state of the economy the LCCI boss stated: โOur approach should not be to continue issuing only debt, especially with the increasingly unbearable burden of interest payments that exposes our fiscal vulnerability. Massive equity financing is the choice we should all urge the federal government to consider now. Nigeria should henceforth use equity financing as an exclusive way of funding budget deficits.
โWe do not have to make huge interest payments if we embrace equity financing. We can use some of the proceeds of our equity issuance to pay some of the down debt, make the fiscal situation more sustainable and rekindle much-needed confidence in our economic and fiscal resilience.โ
According to him, Nigeriaโs ability to source foreign debts is already diminished, making it even more imperative to consider alternative sources of funding.
โIt is obvious that we may not even be able to source debts from foreign investors as in the past. Many factors have diminished our debt ratings, which should push the government to consider immediate issuance of wholesale equity investment at home and abroad to fund idle assets to finance the deficits instead of borrowing more.โ
Also recommending revenue option, he said, โWe must immediately block revenue leakages by curbing oil theft, pipeline vandalisation, trimming excessive fuel, power, gas, and forex subsidies, and massive tax and duty waivers to lift revenue to N20 trillion to N30 trillion thresholds from the present N6 trillion to N10 trillion thresholds.โ (Vanguard)