Public Institutions and Investor Confidence Rating

Public Institutions and Investor Confidence Rating

Investor confidence is crucial for capital market growth and investor participation. It reflects their willingness to engage in opportunities based on risk and return. It combines optimism and trust, considering risk perception and protection from harm.

Public institutions face challenges like fund misappropriation and poor investments. An Investor Confidence Rating (ICR) assesses their performance, boosting trust. The rating, usually approved by the central authority, evaluates the public institution’s ability to manage assets and investments.

In New Zealand for example, the Treasury department (Ministry of Finance) leads the transparent stewardship of public funds and the ICR process. It aligns with the government’s objective of optimising value. The process provides feedback to enhance investment management capability and performance.

The ICR considers factors such as asset management, portfolio maturity, long-term investment plan quality, procurement capability, organisational change, system performance, project and benefit delivery, and asset performance.

Weights assigned to these factors reflect their relative importance. Benefit delivery performance carries the highest weight at 20%, while procurement capability and system performance weigh the least at 5% each.

The ICR incentivises good investment management, addresses performance gaps, and helps agencies identify areas for improvement to maximise value.

In Nigeria, the new administration should tap into this best practice for public sector transparency and accountability.


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