Lagos - Securities and Exchange Commission (SEC) plans to introduce products into the Nigerian capital market to enable it to address problems of mortgage financing, the Director General, Ms Arunma Oteh, said.
Oteh told newsmen in Abuja on Wednesday that the product would also help in agriculture and infrastructure financing.
She said a three-day workshop to build capacity of staff of the commission in the area of securitisation, mortgage-backed securities, covered bonds and liquidity facility was ongoing in Abuja.
Oteh said the plans would enable the Federal Government to come up with a framework on securitisation.
She added that the products would deepen the market and form a critical aspect of the transformation agenda of President Goodluck Jonathan.
Securitisation allows securities issued at the capital market to be backed by hard assets, such as residential portfolio, infrastructure or income streaming projects
``There is a great recognition in the country that the Nigerian capital market is important for long term financing.
``We must have a market that engenders confidence and we believe it is critical to bridge the gaps in medium to long-term financing for housing, infrastructure and agriculture and that is why we are doing this,” Oteh said.
She noted that there were only 20, 000 mortgages in the books of banks in Nigeria but described the figure as low when considered from the standpoint of the importance of mortgage to mass housing.
Oteh also said that apart from the securitisation product, a Nigerian Mortgage Facility ,which is being coordinated by the minister of Finance, would be unveiled before the end of the year.
She said the facility would assist the country to increase mortgages from the current 20,000 to about 200,000.
She said the facility would also help to reduce the interest rate for housing financing.
On building investors confidence in the capital market, she said that the commission would continue to strengthen its enforcement mechanism.
Oteh added that a framework that would enable it to address investors’ complaints within five days was being worked out.
She added that the revamping of the Nigerian Investor Protection Fund and the framework for the collective investor scheme would help to increase the confidence of more investors in the capital market.
Prof. Penn Graham, the Resource Person for the securitisation programme, said the driving force of the product was anchored on the need to drive low cost of lending for infrastructure projects.
He, however, said the impediments associated with such mode of financing needed to be addressed for it to be successful.
Some of the challenges are in the areas of tax regime and legal framework, he said.
Mr Osaro Eghobamien, a lawyer, said that in introducing the securitisation product, the issue of taxation would pose a peculiar challenge.
He noted that the commitment of the Federal Government in ensuring its success was vital.
``Tax issues will present peculiar problem if the structure is not understood.
``So, there will be a need to address the tax challenge but the commitment of the tax agency will be critical.
``The legal framework needs to be done in such a way that it would need to guarantee investor confidence,” he said.