By Ahmed Rahma The Director-General of the Securities and Exchange Commission (SEC), Mr Lamido Yuguda, has disclosed that the state governments in Nigeria have borrowed not less than N900 billion from the capital market. Mr Yuguda made this disclosure on Tuesday at a webinar organised by the Nigerian Stock Exchange (NSE) on ways sub-nationals can raise funds through the sale of state-owned enterprises. The SEC chief, who was represented by the Executive Commissioner in charge of Legal and Enforcement, Mr Reginald Karawusa, disclosed that this amount was raised from the market through debt issuances since 1978. Speaking on Privatisation in Nigeria and the Outlook for Subnational Economic Development, the theme for the event organised in partnership with the Nigeria Governors\u2019 Forum (NGF) and the Nigerian Investment Promotion Council (NIPC), the DG said \u201ca significant part of these funds were deployed to finance capital projects across the country.\u201d \u201cHowever, the ability of states to continue to borrow in a sustainable manner has been severely impacted in recent times. \u201cWith the huge infrastructure gap, decreased allocation from the federal purse owing to relatively low oil revenue and the depressed level of internally generated revenues, states are barely able to pay salaries after servicing their outstanding loan obligations,\u201d he noted. He added that, there is indeed no better time to discuss alternative funding sources at the sub-national level given adverse impacts brought about by the COVID-19 pandemic. \u201cThe capital market\u2019s primary role in any economy is to facilitate capital formation. By creating a system for allocation of capital, investors are able to price risk efficiently while issuers have the opportunity to raise funds to finance projects. In doing so, issuers may choose to raise equities or debts,\u201d he mentioned. The DG also stated that the federal and state governments have the capabilities to unlock enormous potentials through privatisation, which he said \u201cis an avenue for governments to unlock economic potentials inherent in government-owned enterprises.\u201d \u201cThe focus on Nigeria\u2019s journey on privatisation has largely been on the Federal Government. There have been several phases of privatisation exercises in the past with an emphasis on enterprises operating in different sectors of the economy including oil and gas, hospitality, mining etc,\u201d Mr Yuguda added. He also stated that, \u201cSeveral enterprises are still owned and controlled by the government, both at the state and federal levels. A number of these entities have the capacities to generate cash flows and corporate profitability. \u201cHowever, owing to certain inefficiencies, these entities are underperforming and in some cases subtracting from value. Perhaps this is the time for state governments to revisit the privatisation value proposition. There are several benefits to privatisation.\u201d Mr Yuguda informed the participants that privatisation has numerous benefits as the proceeds from the sale of government interest in these enterprises would help augment budget shortfalls and can be applied towards funding critical infrastructure. \u201cBeyond the funds to be generated, governments will enjoy the cost of savings as there would be no further requirements to fund these entities post-privatisation. \u201cThere are further benefits to be enjoyed through the taxes that would be paid in the future by those entities. As they undergo a strategic transformation and become positioned for profitability, these entities are able to create jobs and employ residents of their host states, facilitate infrastructure development and further positively impact the economy in other areas,\u201d he concluded. The CEO of the NSE, Mr Oscar Onyema, in his address, said privatisation occupies a critical position in economic globalisation and provides an avenue for raising the bar towards economic development. \u201cGiven COVID-19, there is no better time to re-visit privatisation and cascade this to the subnational levels,\u201d he added. Also speaking, the Chairman of NGF, Mr Kayode Fayemi, said the state governments have been constrained to increase spending in a bid to mitigate the effects of the pandemic. According to him, \u201ccontainment is fairly in place but more needs to be done to ensure progress is not lost and that is where privatisation comes in. \u201cIf the private sector takes over in critical sectors, state governments can focus on education and health among others\u201d.