Imperatives Of Rivers N250bn Bond

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The saying that one “who fails to plan, has already planned to fail”, is a known fact that is traceable to the ugly stories associated with retirement from civil service or serious business activities.

It is common knowledge that most persons either in public service or organised private sector falsify their date of birth in order to elongate their stay in office for fear of retirement.

This perhaps accounts for the three-day investor/issuer education outreach programme organised by the Securities and Exchange Commission (SEC) in conjunction with the Rivers State Government. The programme which focused on the education of the citizens of the state on the need to invest in the capital market and also to invest in the state government’s N250 billion bonds that will hit the capital market in batches, the N100 billion will be due in October 2011.

Government spokesman, Mr David Iyofor explained that the bond would be tied to funding specific development projects like Greater Port Harcourt City, The Port Harcourt Monorail, New Rivers State University of Science and Technology, Phase I, Ring roads that will connect the mega city and the old ones, among other development projects.

To the present administration, led by Rt. Hon. Rotimi Chibuike Amaechi, the resort to the capital market is aimed at raising quick fund to complete these projects which will attract foreign investors for economic expansion.

In his explanation, the state commissioner for Finance, Chamberline Peterside, said “the economic indicators of the state including annual Gross Domestic Product of about N30 trillion compared to its debt stock are positive attributes that the state can go ahead to raise additional funds to finance its long-term development agenda and fast-track social and economic growth”.

Before now, especially around 2006 – 2009 citizens of Nigeria and Rivers State in particular were investing their money in the capital market until the economic melt down and the unfaithfulness on the side of some brokers scared investors from the capital market.

Statistics revealed that in 2008, market capitalisation was about N13 trillion but at the present, market capitalisation at the Exchange is N7 trillion, though there is a gradual process of market recovery which only serious investors will utilise and expand their chances of making gains when there is a rebound.

During the three-day programme themed “the role of the capital market in mobilising fund for business expansion and infrastructural development.

The Director General of SEC, Ms Arunma Oteh and her crew educated the different strata in the state on the need to return to investing ways. She x-rayed the effort of the commission to remove bad eggs in the capital market and the fact that Nigeria has lost her place in the global capital market due to lack of investment culture that has penetrated the citizenry.

“Only three to four per cent of Nigerians invest in the capital market, while 60 per cent of Americans invest in the capital market”, she said.

Oteh also highlighted that 60 – 70 per cent of existing shares in the NSE belong to foreigners, which is proof that market must bounce back to gains.

On the 250 billion bond to be sold by the Rivers State Government, SEC DG said every investigation and enquiry has been made by the regulatory body, on the genuineness  of the bond and the security of the investment.

For the average Rivers indigene, the N250 billion bond float provides an opportunity for investment in securities whose periodic interests and other returns are predictable. Even the maturity date of the principal investment is known ahead of time.

Secondly, bonds attract steady interests than stocks which prices fluctuate on daily basis. It is, therefore, a more reassuring investment for people that are hypertensive.

Another reason why it is worthwhile to invest in the Rivers bond is because of its short-term nature. A major characteristic of such bonds is that their interests are usually higher than what the banks pay as interests on savings accounts.

Apart from those in the private sector, investment in the Rivers bond will guarantee a fixed income for returnees and those pension fund administrators looking for a very secure and promising investment outlet.

For the Rivers man and woman who wishes to see an improved Rivers State and believes in the dreams of the present government, an investment in these bonds can also be a demonstration of genuine patriotism rather than for pecuniary gains.

From the information revealed by the visiting regulators, other states like Lagos, Ebonyi, Delta, Bayelsa, Kaduna, Edo, Akwa Ibom etc have raised funds through the bonds market to execute major projects that benefited their states and the individual investors.

With the effort of the regulators, the laws on the ground and the institutionalised financial base of the state, it will be difficult for the present future administrations to disorganise the investment, as stated by the finance commissioner, Hon Chamberline Peterside.

“The state has institutionalised its efforts, giving no rooms for future administrations to violate loan covenants concerning the bonds.

Ministry of Finance and other agencies are making conscious and relentless efforts to modernise and automate the Public Accounting System, strengthen the Debt Management Office and establish relevant institutions that can transparently monitor projects, while acting as checks and balances of fund utilisation in the public sector”, Peterside said.

The zonal head of SEC office in Port Harcourt, Mr Okokon Akpan, also outlined the benefits of the capital investment, which include: Capital appreciation, use of CSCS statement to obtain loan, co-ownership of the company by the share owners, among others.

“Economic challenges in the country will be saved by the country that has capital market. This means there is the need for everybody to start investing”, Mr Akpan explained.

Hon. Chidi Llyod Leader, Rivers State House of Assembly made explanations on why the House accepted the bond issue after all legal investigations of the benefits of this move. “The bond will be sold in batches. The first batch will be N100 billion.

“Rivers State has not had it good in governance, that was the reason why we asked the government to raise N100 billion through bonds. Government must look else where for fund to handle the projects and make room for investors to come in and invest,” Hon. Lloyd stated.

Even though critics had accused the House of felony, the main reason for all the accusation is pegged on ignorance as “those that will invest in the bond would be protected and monitored by the House and SEC.

The benefits of the capital market and the Rivers N250 bond due for October 2011 cannot be over emphasised.

In the same vein, it is also instructive to urge the Rivers State Government to ensure that mechanisms needed for the bond to achieve its set goals are put in place to prove skeptics wrong.