Capital market operators have reiterated the urgent need for the Federal Government to introduce robust incentives targeted at listed public companies.
Such incentives, they argued, would serve as motivation for more Nigerian companies to explore opportunities in the capital market for listing and capital raising.
According to the experts, by creating a more supportive regulatory and fiscal environment, the capital market can better fulfil its potential as a key engine for economic development and private sector growth.
In their views, one of the crucial steps towards revitalising the Nigerian capital market is the reintroduction of margin trading and securities lending in a more modernised, regulated and transparent form.
According to the operators, the mechanisms, when properly structured and supervised, would enhance liquidity, deepen market participation, and ensure a more orderly and functional trading environment.
They maintained that despite numerous economic challenges, the Nigerian stock market has continued to demonstrate resilience and play a vital role in national development.
An investment banker and stockbroker, Tajudeen Olayinka, underscored the significance of the stock market to the country’s economy.
He noted that although the Nigerian Exchange (NGX), formerly known as the Nigerian Stock Exchange (NSE), has been in operation for 64 years, the broader stock market has contributed meaningfully to economic development over the full span of the country’s independence.
He pointed out that the market has served as an essential platform for capital raising across diverse sectors, thereby facilitating capital formation and attracting foreign investment. According to him, one of the less frequently acknowledged but highly impactful contributions of the capital market is its support for improved liquidity in the foreign exchange space. He explained that the listing and trading of government securities and other financial instruments have attracted significant foreign portfolio investment.
This influx of capital has, in turn, contributed to the relative stability of the naira and played a role in the recent moderation of inflationary pressures.
Olayinka further emphasised the importance of creating specific incentives for companies already listed on the Exchange. He believed that the government must take deliberate steps to make the public market more attractive to private sector operators, thereby encouraging more firms to pursue listings as a means of raising long-term capital.
In addition to fiscal incentives, he stressed the importance of regulatory reforms that would ensure that listed companies are rewarded with policies that reflect their contributions to market depth and economic resilience.
Also contributing, Team Lead at the Finance Research Department of InvestingPort, Uwen Olubummo, lamented the relatively low number of strong and profitable Nigerian companies that remain unlisted.
She pointed out that several high-performing enterprises, particularly in the technology and energy sectors, have continued to operate outside the formal capital market due to the absence of adequate incentives and perceived regulatory complexities.
Olubummo proposed that targeted measures such as tax breaks, reduced listing fees, or streamlined compliance requirements could serve as meaningful motivators to bring more companies into the capital market fold.
She argued that expanding the base of listed companies would not only diversify the market but also offer more investment options for both retail and institutional investors.
Furthermore, she stressed the need to strengthen investor education and financial literacy, especially at the retail level.
She also called for sustained collaboration between key institutions such as the Nigerian Exchange (NGX), the Securities and Exchange Commission (SEC), and other relevant government agencies to implement long-term educational campaigns and outreach programs.
She said that with all these measures put in place, informed and educated retail investors are more likely to participate meaningfully in the market, which in turn supports market liquidity and reduces volatility.
Beyond education, she also called for the establishment of clear, consistent, and long-term policy frameworks around key economic levers such as foreign exchange management, taxation, and capital controls.
According to her, such clarity is essential to instill confidence in both domestic and foreign investors, thereby fostering sustained inflows into the market.
She noted that the Exchange has embraced stronger digitization, witnessed increased retail participation, improved disclosure and reporting standards, and successfully listed several major corporates that have helped deepen the market.
She particularly highlighted the demutualisation of the Exchange in 2021 as a transformative move that positioned the NGX on a more competitive and globally-aligned trajectory.
Olubummo added that with the right policy mix, investor confidence, and regulatory support, the Nigerian capital market can play an even greater role in shaping the country’s economic future as it enters the next chapter of its post-independence journey.
President of the New Dimension Shareholders Association of Nigeria, Patrick Ajudua, noted that recent trends have been generally positive, particularly in terms of market capitalisation and the all-share index.
However, he emphasised that there is still room for significant improvement. According to Ajudua, the government needs to intervene in several key areas to enhance market performance.
He highlighted the importance of making the market more attractive by ensuring the steady availability of foreign exchange, which would allow investors to repatriate their returns without delay.
He also pointed out that the heavy tax burden currently placed on investors is discouraging, particularly the issue of double taxation, which he described as a disincentive.
He stressed the need for stabilising the foreign currency rate, as this would help companies plan strategically for their foreign exchange requirements, including the importation of raw materials and the settlement of international obligations.
Ajudua further called attention to the high cost of doing business in Nigeria, citing inadequate infrastructure and the high cost of diesel for powering industrial operations as factors that erode company profitability.
Inflation was another major concern. He warned that unchecked inflation leads to high interest rates, which discourage borrowing and ultimately stifle business growth.
He urged regulatory authorities, especially the Central Bank of Nigeria, to adopt measures that minimise inflationary pressures, provide competitive interest rates, and reduce financing costs.
In terms of policy, Ajudua advocated for the formulation of investor-friendly legislation that would attract more participation in the capital market.
This includes policies such as tax holidays for new product innovations, encouraging public-private partnerships to boost infrastructure, and creating employment opportunities to reduce unemployment levels.
Turning to the role of the regulators, he called for a review of the costs associated with listing companies on the stock exchange.
He also advised the government to avoid implementing a capital gains tax, arguing that it would discourage investment.
While acknowledging the importance of penalty fees in enforcing compliance, he cautioned that these fees should not be excessively high and must be applied with a human touch.
Ajudua emphasised the need for fairness and equity in the administration of the market, stating that regulators must ensure justice is served without bias and maintain a zero-tolerance policy for market infractions.
