Federal Government Ministries, Departments and Agencies, especially financial services regulators are to invest N1.54tn in five years to boost liquidity in the financial services sector.
According to the Federal Government National Development Plan 2021-2025, the government is planning to raise the liquidity thresholds in each segment of the financial system to the levels that will support the growth and development of the country.
The investment is also expected to strategically optimise all components of the nation’s balance sheet to unlock the liquidity required to support the stability, growth and transformation of the economy.
The Federal Government said it wants the total value of the payments system to be worth 500 per cent of the GDP by 2025, while the total private sector credit as a percentage of the GDP is expected to increase from 13.21 per cent to 25 per cent.
According to the document, the investment of these government institutions will be leveraged to organise and support the private sector to realise the goals of the NDP.
The NDP adds that private operators, such as banks, insurance companies, exchanges, and others in the various segments of the financial sector will be coordinated to invest and achieve their objectives.
Consequently, the Ministry of Finance, Budget and National Planning; Ministry of Industry, Trade and Investment; Infrastructure Concession Regulatory Commission; Central Bank of Nigeria; Securities and Exchange Commission, National Insurance Commission; National Pension Commission, and others have been tasked with raising the amount to raise liquidity thresholds of the financial sector over the five-year period.
The NDP read in part, “Achieving the stated objectives for this sector requires huge investments coming from relevant MDAs and industry players. For instance, core ministries like the Ministry of Finance, Budget and National Planning and the Ministry of Industry, Trade and Investment as well as Infrastructure Concession Regulatory Commission that are directly allocated capital expenditure from the budget will make investments in this sector to achieve the objectives.
“This will occur at the sub-national level. Estimated total public investment to the sector during the plan period is N1.54tn. In addition, the primary regulators of each of the financial sector components will contribute to such investments.
“These agencies include the Central Bank of Nigeria, Securities and Exchange Commission, National Insurance Commission, and the National Pension Commission. Operators in the financial sector will also invest to achieve the goal of the Plan for this sector.
“Some of these players that are government-owned are largely the DFIs, including the Bank of Industry, Development Bank of Nigeria, Bank of Agriculture, Nigeria Export-Import Bank, Infrastructure Bank of Nigeria and Nigeria Sovereign Investment Authority.”
The NDP document shows that the nation will continue to leverage the support of its development partners such as the World Bank, International Monetary Funds, African Development Bank, African Finance Corporation and International Finance Corporation.
According to the Federal Government, the post-COVID-19 economic recovery demands aggressive resource mobilisation for private and public sector investments, adding that a robust domestic financial sector and capital market are very critical as external investment inflows have tightened due to the broader uncertainties in the global economy.