He disclosed this during a webinar organised by the
Securities and Exchange Commission (SEC) in collaboration with the Federal
Ministry of Mines and Steel Development with the theme, “Financing the Solid
Minerals Sector through the Capital Market and the Critical Role of Commodity
Exchanges.”
Sekibo explained that a fully established market formation
process that would lead to having a Corporation as an integrated solid mineral
institution like NNPC which allows the collateralisation of assets those banks can
rely on for alternative funding options.
According to him, this will guarantee other creative ways of
raising funds for financing commercial activities relating to solid minerals
and viable projects along its value chain.
In a statement endorsed by Ozena Utulu, Acting Group Head,
Corporate Communications of the bank says Sekibo who was represented by the
Divisional Head, Strategy and Business Solutions, of the Bank, Olusegun Akanji,
said for the sector to be viable, it requires lots of converged government
interventions because for any development focused sector to kick-off around the
world, it needs government intervention to lay the foundation for the private
sector and funders to step-in and pool their resources.
“Once, we can collateralise these assets, whether they are
under the ground or being determined, you use different instruments to bring
liquidity into them. Then investors will follow up once we have established
there is enough they can explore.” the MD stated.
He further suggested that finance sector regulators need to
expand its Prudential Guidelines to accommodate the instruments such that
precious metal backed or solid minerals backed assets could qualify as part of
the computation of liquidity ratios.
“Once banks start injecting their resources, customers would
certainly follow that trend. You can start arranging for sophisticated
solutions like bonds, bullion backed assets and pension notes. Again, banks
will have to be poised to hold the funding that comes from this sector; that way,
they can open new transactional frontiers either locally or internationally.
“At the base of this, are the issues of pricing and
integrity of the market. Once banks play in that sector and we have a
government institution like the NNPC type to hold all these documentations, it
would be very easy to establish price discovery on an ongoing basis. This will
in turn attract international funders, hedge funds and retail investors. Today,
we have retail bonds in the same way; we can have gold backed or any of the
solid mineral assets where retail investors can put in the funds,” Sekibo
explained.
Meanwhile, it would be recalled that Heritage Bank Plc has
said its involvement in the private sector collaboration with Dukia Gold &
Precious Metals Refining Co. Limited is set to unlock the over N344 trillion
market worth of gold investible instruments in the solid minerals sector.
However, he reiterated that consistent packaged framework,
which could only be held by an established government institution, as part of
the layers of framework, would help to tackle major challenges in trying to
support Dukia Gold’s clients.
“With consistent packaged framework, it will be easier for
Dukia Gold and help in less spending. If Dukia Gold should speak of their
challenges, they will speak about tonnes of tonnes of documents they have to
produce. But with a unified source of documentation, it makes the process
easier and improves cost management. These are some of the challenges we have
experienced in trying to support a few clients we worked with,” Sekibo stated.
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