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'PRUDENT CAPITAL FINANCING, VITAL FOR ECONOMIC DEVELOPMENT'

By NBF News

A developing country that engages more in productive capital expenditure than recurrent expenditure will create a better opportunity for its growth and development, experts have said.

Chief Executive Officer, Riskguard Consult, Mr. Yemi Soladoye, who lamented that the country still had infrastructural deficiencies said that if more money was spent on capital expenditure and not on recurrent, this would benefit the economy.

The consultant noted that the country had not yet started utilising pension funds as done in advanced countries.

Soladoye said, 'In many advanced countries, pension money is a viable financing alternative of long term funds because a developed pension builds a pool of financial resources that provides attractive investment opportunities.'

The expansion of economic activities, he explained, would stimulate increased infrastructural investments.

Pension funds, he said, would provide the financing of infrastructural development in a developed country.

The Chairman, Nigerian Council of Registered Insurance Brokers, Portharcout Area Committee, Mr. Dele Kareem, advised on the prudent spending.

He also challenged on better capital expenditures, which could create employment opportunities for the citizens.

When employment was created, he explained, people would pay more tax, thereby, providing more funds for the government which could be used to develop the economy.

According to a financial analyst, Mr. Abel Awe, capital expenditure for expansionary purposes and productive output will benefit the country.

On the other hand, he explained, 'A more recurrent expenditure such as the financing of salary increase for different sectors, though, it may increase patronage of goods and services, this will raise the inflationary level.'

He also said, 'If deficit emanates from the recurrent side, that is not good for the economy, but, if it is money spent on creating capacity, energy, good roads and the rest, then, that is a productive venture which will be better.'

He added that a more recurrent expenditure might not go well for fiscal balance because the purchasing of deficit would make the government to look outside to raise more funds, which meant that the debt profile would begin to rise again