Thesis Abstract

Abstract
State governments often face challenges in financing their projects due to limited fiscal resources and the need for substantial capital investments. One potential solution to this problem is tapping into the capital market to raise funds for infrastructure development, public services, and other key initiatives. However, there are various issues and prospects associated with financing state government projects through the capital market that need to be carefully considered. This research project aims to explore the challenges and opportunities of leveraging the capital market for state government financing. By conducting a thorough analysis of existing literature, case studies, and expert opinions, this study seeks to provide insights into the viability and effectiveness of this financing approach. The primary problems associated with financing state government projects through the capital market include the complexity of the process, the potential for high borrowing costs, and the risks involved in issuing bonds or other securities. State governments must navigate regulatory requirements, market conditions, and investor perceptions to successfully raise funds through the capital market. Despite these challenges, there are several prospects to consider when exploring capital market financing for state government projects. By accessing a broader pool of investors, states may be able to secure more favorable terms and lower interest rates compared to traditional borrowing methods. Additionally, capital market financing can provide states with greater flexibility in structuring their debt and managing repayment schedules. Furthermore, tapping into the capital market can enhance transparency and accountability in state government financing by subjecting projects to market scrutiny and investor oversight. This can help build confidence among stakeholders and demonstrate a commitment to responsible financial management. In conclusion, financing state government projects through the capital market presents both challenges and prospects that warrant further investigation. By understanding the complexities of this financing approach and exploring potential opportunities, state governments can make informed decisions about the most suitable funding sources for their projects. This research project aims to contribute valuable insights to policymakers, financial experts, and other stakeholders involved in state government financing and capital market operations.

Thesis Overview

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

Financing the state government project through the capital market has brought a lot of problem in our country and people are seeking a way to solve the problems. Now the researcher want to find out the problems encountered in financing the State government project through the capital market and also how the capital market helps in financing the state government project.

Furthermore, the researcher will also find out the functions which the capital market has performed in the funding of government projects. All these point will help the researcher to carry out her work successfully.

1.2 RATIONALE OF THE STUDY

There have been serials of inefficiencies in financing the state government project through the capital market. Hence the reason for this study are:

i. To identify the problems facing state government.

ii. To find out possible solution of solving these problem.

1.3 SIGNIFICANCE OF THE STUDY

The purpose of financing the state government project through the capital market is to ensure the top priorities of the Nigeria government project and the submissiveness of the capital market.

Therefore this study will be a benefit to public and state government by:

i. Providing facilities for the quotation and ready market ability of shares and stocks and opportunity and facility to raise fresh capital in the market.

ii. To provide local opportunities to mobilize long term capital for the long term purpose.

iii. Foreign business also benefit with the facility to offer their shares and the Nigeria public on opportunity to invest and participate in the share and ownership of foreign business.

1.4 BACKGROUND OF THE STUDY

The function of the state government in recent times includes the provision of amenities and infrastructures which are capital intensive in nature. Over the years most state governments especially in the developing countries have been carrying out such functions with funds from external sources as loans grants and development assistance or aids. These resources have often been complemented with domestic resources as statutory allocations from the federal accounts, internally generated funds and domestic borrowing.

However, events in the last few years have indicated the inadequate of these sources. Nigerians experience in financing capital projects has been similar to these of other developing countries with large revenue from oil. Thus, with the down turn in the economy following severe external stocks in the international oil market capital projects becomes imperative, there has been a general shift of focus to the capital market in financing government projects. This term paper attempts an examination of the prospects and problems of financing state government project through the capital markets.

Specifically, this term paper identifies the potentials for the capital market financing facilities like Stadium, municipal market and industrial housing estate amongst others.

1.5 DEFINITION OF THE TERMS

CAPITAL MARKET

This refers to a collection of financial institutions set up for the granting of medium and long-terms loans. It is a market for longer term instruments which include market for government securities, market for corporate bonds, market for corporate shares (stocks) and market for mortgage loans.

REVENUE BONDS

These are issued by state or local government. They are usually project tied and it is expected that the underlying projects should be available enough that both the principal and the interest on the bonds will be paid from the returns accruing to such projects. Examples of such projects are water scheme market building, road and bridges and hospitals etc.

INDUSTRY

Consists of the following economic activity groups, mining and quarrying, manufacturing, construction, electricity, gas, water and sanitary service etc.

PRIMARY DATA

These are facts organized or brought together by the researcher in the course of his research work.

SECONDARY DATA

These are facts pulled by the researcher. These facts had already been in existence. It could either be document or otherwise.