Economic and Financial Review


Central Bank of Nigeria


State Government Finance, State Government Projects, Project Financing, Capital Market


The paper discuses the problems and prospects of raising funds from the capital market to finance state government projects. The need for viable alternatives to finance government projeds had not only been a topical issue but one that had engaged the attention of policy makers. This has arisen because conventional sources of government project financing have been proving increasingly inadequate. From a short review of available options for financing government projects such as statutory allocations, internally generated revenue, bank and non-bank domestic borrowings, donations and taxation, the paper discusses the relative advantages of capital market financing of government projects, principal amongst which is the fad that government subvention and other earnings can be judiciously utilized for other purposes. Conditions for the efficient use of the market are outlined to include favourable interest rate policy and long-term political and economic stability. A review of Nigeria's experience indicates the success of previous attempts mainly on projects having economic returns and to a less extent for other infrastructural utilities. Specifically, the paper identifies the potentials for the capital market financing of facilities like stadia, municipal markets and industrial/housing estates, amongst others.

Author Bio

Mr. B.S. Adebusuyi is a Senior Economist, Industrial Studies Office, Research Department, Central Bank of Nigeria.

Publication Title

CBN Economic and Financial Review





Recommended Citation

Adebusuyi, B. S. (1994). Financing State Government Projects through the Capital Market: Problems and Prospects. CBN Economic and Financial Review, 32(2), 113-132.



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