Fiscal incentives can boost listing, make Nigerian capital market Africa’s leader - expert

ing director, Rham Durham Consulting Limited, while welcoming participants, said the event was targeted at discussing how to galvanise the capital market as a hub for economic prosperity while focusing on ways it can help eradicate poverty from the country.

Uwaleke, professor of capital market studies and chairman, Chartered Institute of Bankers of Nigeria (CIBN), Abuja Branch, who made the event’s keynote presentation, said Nigeria has the potential of leading other capital markets in Africa with all key stakeholders playing their respective roles. He said it was therefore possible to reposition the Nigerian capital market ahead of its peers from South Africa, Morocco, Nigeria and Egypt (SMNE), an order arranged based on the total market capitalisation in dollar terms, and change it to NSME with Nigeria as the leading exchange in Africa.

Speaking on the role of government and other capital market stakeholders in keeping the Nigerian capital market on the driving seat of most capitalised exchanges on the continent,

Uwaleke said dealing with the roadblocks, which are exogenous, including weak economic environment, low financial inclusion, widespread insecurity and the need to diversify the issuer base and stop the concentration, must be taken into consideration.

“The Nigerian capital market has the potential for rapid growth and continental leadership as the biggest economy in Africa. It also has the largest population, but regrettably, Nigeria’s capital market growth has been hampered by a weak macroeconomic environment.

“The biggest market by capitalisation is South Africa at over $1 trillion. Morocco is a distant second at $66 billion, while Nigeria occupies the third position at about $57 billion. Prior to 2016, the Moroccan market was smaller than that of Nigeria but overtook the Nigerian market in 2016, as Egypt is fourth with a market capitalisation of $42 billion,” he said.

Speaking on repositioning the capital market through the supply side, the capital market professor said: “Fiscal incentives may take various forms and have the potential of encouraging more companies to seek quotation. Also, the introduction of a tiered corporate tax system in favour of public companies listed on the Exchange will induce some private companies to go public. Use of Mandatory Measures, although not popular, can be mandatory measures that can be used to stimulate the securities market, especially where moral suasion has failed.”

However, on the demand side, he noted that the NGX, SEC and registered companies must continuously ensure effective capital market regulation and surveillance to boost investor confidence, deal with insider trading, which has proven difficult to detect and curb in the Nigerian capital market, in view of recent cases involving listed companies; and enforce corporate governance codes for listed companies to boost market confidence.

The market expert also said that repositioning can be attained when there is an adequate legal framework and flexible regulatory environment.