Unlocking capital market benefits, AIHN explains private sector, govt roles

The Nigerian capital market, which since inception has responded closely to economy cycles, monetary and fiscal policies, is believed to open more opportunities now than ever on some defined provisions, both on the part of private sector players and government at different forms.

Addressing issues and prospects inherent in the Nigerian capital market at the second edition of the Association of Issuing Houses of Nigeria (AIHN) annual dinner and award night Thursday last week, capital market experts and stakeholders explained the critical roles of the private sector in harnessing potential infrastructure development via the capital market.

“There is need for the private

sector and the capital market to play driving roles in achieving economic prosperity and development while partnering with the government at all levels,” Chuka Eseka, president, AIHN, said.

He reiterated that the capital market needed to invest intellectual capital, which will translate into develop solutions for funding key national priority sectors to achieve transformational and catalytic economic benefits.

“For the capital market to however deliver on its role as a catalyst of economic growth, market operators role in the financial system value chain must be strengthened,” Eseka stressed.

While in recent times the Nigeria capital market has seen increased capital inflows into some asset classes such as money market instruments, reduced inflow into the bonds market and massive sell offs in the equity space, Eseka pointed out major issues needed to be addressed for a vibrant and attractive capital market.

Importantly is the consistent high interest rate, especially on short-term risk free instrument, which is perceived as a disincentive to long-term investors and unfavourable to our capital market as a source of risk capital formation in any economy.

“We are not unaware of the economic challenges which forces the tight monetary policy regime but the need for fiscal and monetary policy balance to prevent the crowding out of the capital market cannot be over emphasised,” Eseka explained further.

Hence the need for favourable capital structure to the capital market, as listed companies are more transparent in their financial reporting and pay much more in taxes compared with unlisted companies.

Also, he raised the need for tax incentives such as reduced company income tax remitted period and reserving government privileges for private companies with a committed refined period for listing.

“We encourage government to sustain the ease of doing business’ reforms in the regulatory environment. In this regard, we urge the Federal Government to inaugurate the PENCOM board just as the LCC board. This will strengthen governing structure of the pension industry and empower the regulator to make policy decisions for the benefit of the market and the economy,” Eseka said.