The managing director/chief executive officer, Heritage Bank Plc, Ifie Sekibo, has said that market formation framework is key to optimal exploitation of Nigeria’s precious metal and solid mineral endowments.
Sekibo said this during a webinar organised by the Securities and Exchange Commission (SEC) in conjuction 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’.
The Heritage Bank CEO observed 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 that banks can rely on for alternative funding options is needed.
This he said will guarantee other creative ways of raising funds for financing commercial activities relating to solid minerals and viable projects along its value chain.
Sekibo, who was represented by the divisional head, strategy and business solutions of the bank, Olusegun Akanji, stated that 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.
According to him:“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.”
He further suggested that finance sector regulators need to expand their 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,” he said.
Recall that Heritage Bank Plc earlier 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, the bank noted 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.