Association of Capital Market Academics of Nigeria (ACMAN) has urged the federal government to tie future loans to self-liquidating projects.
The body made its position known at a press briefing Tuesday in Abuja.
In a chat with prominent finance reporters, ACMAN President, Prof. Uche Uwaleke explained that as infrastructure financing continues to pose serious challenges to the government, borrowing for self-liquidating projects will go a long way to address debt servicing challenges.
Experts say Nigeria spent about 90 per cent of its revenue on debt servicing. In the 2022 budget the federal government has proposed to spend N3.16 trillion or 23 per cent of the budget to service debt.
Uwaleke said: “The government should approach the Capital Market to finance deficit to raise funds but in doing so, we should de-emphasise just issuing bonds because when you do bonds without tying the bonds you are issuing to a project, you run the risk of using that proceed for some other things aside infrastructure financing.
“When you issue revenue bonds you use it to finance a project that you know the revenue from that project can be used to service the loan and retire the bond.
“If we issue revenue bonds we won’t be bother about debt service burden because you are going to use revenue from that project to service the self liquidating projects. It is left for the government to identified those viable projects they need to fund and approach the Capital market for the funds.”