The Lagos Chamber of Commerce and industry (LCCI) has advised the Federal Government to adopt exclusive use of equity financing to fund budget deficits, as opposed to continuous issuing of debt instruments with its attendant burden of interest payments.
President, LCCI, Dr. Michael Olawale-Cole, gave the advice in Lagos, on Tuesday, at the Chamber’s quarterly briefing on the State of the Economy, while commending the federal government on the planned electronic payments from public treasury from March 1, 2023.
His words: “Looking at the huge deficit to be financed by borrowing, can we consider more efficient alternatives to new borrowings? Can we issue equity to finance the deficit instead of using debt? Can we break the path in which the federal government only approaches the debt markets at home and abroad and never approach the equity market at home or abroad? Investors invest both in debt and equity.
“Our 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.
