‘More engagement will help address policy issues affecting capital market’

Nigerian Exchange Limited (NGX) has stated that collaboration and engagement with a ‘stronger voice’ will help to address several policy changes recently affecting the capital market.

The Chief Executive Officer, NGX, Temi Popoola, disclosed this at the Nigerian Economic Summit Group (NESG) Fiscal Policy Roundtable held at the weekend.

Speaking at the webinar tagged ‘Impact assessment of the 2021 Finance Act’ organised by the Nigerian Economic Summit Group, Popoola commended the economic policy direction of the current administration citing the passage of the Petroleum Industry Act and the 2021 Finance act as indications of the government’s commitment to boost non-oil revenues in Nigeria.

According to him, the tenets of the 2021 Finance Act brought a lot more clarity on investment such as the Real Estate Investment Trust (REIT), Capital Gain Tax (CGT) and Securities Lending transaction.

He said investment in real estate and other asset classes on the exchange has a lot of potential gains, noting that they have helped to boost investors’ confidence over the years.

Further highlighting the direct impact of the act, Popoola stated that the introduction of the capital gains tax on transactions over N100 million is a welcome development in line with the government’s drive towards an increased tax bracket.

He however cited that the policy might have an adverse effect of discouraging investors, including institutional investors.

According to him, as retail investors were the primary drivers of the market in 2021 and largely fell below the N100 million cap, this policy should drive further participation by those in this category.

He also noted that the potential macroeconomic effects of the finance act including the introduction of excise taxes on non-alcoholic beverages and education tax, as well as the potential impact on the abilities of the affected entities to raise capital and pay dividends to investors citing the timing and recovering economy as factors that may influence this.

He however noted that overall, the law serves to boost the capital market and the economy, reiterating NGX’s commitment to adhering to government policy and driving growth in the capital market.