Mobilization of domestic savings for capital formation and investment has been identified as a critical success factor for harnessing the true growth potential of the Nigerian economy.
This was stated by the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed during the submission of report of the Working Group on National Savings Scheme in Abuja, Tuesday.
The Minister stated that the just launched Medium-Term National Development Plan 2021-2025 recognizes the role of a deep financial market in supporting the high and sustainable growth the plan aims to attain. I hope the proposals made in this report will guide Government in taking actionable steps to actualize the objectives outlined.
She assured that she would review the report and work with the Securities and Exchange Commission and other stakeholders to ensure that the country fully realizes the potential benefits of the Scheme to the Country.
Ahmed said, “We understand that this initiative will involve several other agencies such as the CBN, FIRS, NAICOM and other important stakeholders. We will leverage on our collaborative working environment within the Government to ensure we get necessary buy-in and commitment from relevant stakeholders.
“On behalf of the federal government and the Ministry of Finance, Budget & National Planning, I extend my sincere appreciation for your selflessness in giving your time and skill in this painstaking work in support of Government. I trust that we will count on your patriotic spirit when we call on you for further support in this or other laudable endeavours for our dear Country”.
Earlier, the Director General, Securities and Exchange Commission (SEC), Mr. Lamido Yuguda explained that the need to establish a National Savings Strategy was outlined in the 10 Years Capital Market Master Plan “as one of the key strategies to enhance capital formation by mobilizing domestic funds for investment to drive rapid economic growth.
“It envisaged the deliberate provision of risk capital as venture capital and private equity that are naira based and more committed to the long-term prosperity of Nigeria as well as create a buffer to the instability created by foreign investors. The CAMMIC commissioned a white paper on a National Savings Strategy and recommended to the Minister of Finance, Budget and National Planning the formation of a Working Group to explore the feasibility of the report findings”, he added.
Yuguda thanked the Honourable Minister for Finance, Budget and National Planning for graciously embracing this initiative and constituting this National Working Group and expressed the hope the Honourable Minister will accept the recommendations of Working Group and facilitate the adoption of the National Savings Scheme in the Nation’s Development program.
“We are indeed grateful for your commitment and efforts to position our market where it deserves to be – a capital market that will broaden access to economic prosperity by enabling the emergence of financially responsible citizens, accelerate wealth creation and wealth distribution, provide capital to small and medium scale enterprises, and catalyze housing finance” He added.
While presenting the report, Dr. Ore Sofekun Member of the Committee and CEO of Foothold Advisors Limited who presented the report on behalf of the Committee Chairman, Mr. Fola Adeola, said the scheme will be open-ended and considering its medium-term to long-term objective, participants will have the opportunity to decide how their contributions will be invested and will be able to make periodic re-allocations.
To allow for product diversification and provide savers flexibility and choice, she stated that multiple investor risk/return profiles have been designed with corresponding savings products. These products will allow service providers offer an array of diversified product options tailored to match customer needs. New Government issued savings instruments that have features to protect savers from rising inflation have been recommended and a number of special products have also been proposed with the needs of Nigerians in mind.
On implementation Roadmap, Sofekun said the Scheme will be subject to the overall supervision of the Securities and Exchange Commission, and structured, to start, as a Department within the SEC adding that with the Investment and Securities Act (ISA) of 2007 currently being reviewed, a new section should be introduced in the proposed Investments and Securities Bill (ISB) to provide for the establishment of the National Savings Scheme as a mandatory scheme and other related matters.
“The new provisions in the ISB should be articulated to give the NSS its own advisory board. The governance structure of the Scheme should be robust and transparent with stringent measures in place to ring-fence the assets of the Scheme. strategy and advise the government on the extent and period for program incentives, conduct technical reviews of proposed products and supervise overall program philosophy.
“The implementation mechanism is designed to consider practical realities and minimize complexity. The main objective is to create a stable and optimal financial intermediation structure where channels and savings products are easily accessible, and an effective and robust institutional framework is established.
“The overriding goal is to incentivize the population to save, have access to various savings investment products and ultimately, provide a pool of funds to finance capital investments. The initial take-off expenses should be borne primarily by the Ministry of Finance, Budget & National Planning with some funding provided by the SEC” she added.
The SEC launched a 10-year Capital Market Masterplan in 2015. The Commission at that time believed that having just emerged from a bubble that negatively impacted the performance and confidence in the Nigerian capital market, it was expedient to come up with a market wide strategic blueprint that had the buy-in of all stakeholders aimed at making our market deeper, vibrant and more effective.
The implementation of the initiatives in the 10-year master plan will transform the Nigerian market, facilitate the diversification of our economy, encourage savings and create wealth. This will no doubt grow investor confidence, improve the depth and breadth of the market in terms of product offerings, engender market integrity, and contribute to the country’s economic growth.