The MD/CEO  Heritage Bank Plc, Ifie Sekibo has said that market formation framework is the right way  to optimally exploit Nigeria’s precious metal and solid minerals endowments. He made this known 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 clarify 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 collateralization of assets those banks can rely on for alternative funding options.

“Once, we can collateralize 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.  Furthermore he said  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.