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By Helen Oji
27 July 2021   |   3:08 am
Investors in the nation's capital market have stressed the need for the Federal Government to adopt a holistic approach in tackling issues constraining the growth of the market

Nigerian Exchange Limited (NGX)

Investors in the nation’s capital market have stressed the need for the Federal Government to adopt a holistic approach in tackling issues constraining the growth of the market to achieve sustainable recovery.

In separate interviews with The Guardian, the shareholders expressed worry about the huge loss of investment they have suffered in the last few years, owing to the increasing level of insecurity, kidnapping, recurrent farmers-herders clashes, unemployment, weak naira and GDP growth, rising inflation and dwindling revenue.

Market capitalisation of listed equities dropped by N1.369 trillion from N21.515 trillion at which it opened for trading on January 5, 2021, while the All-Share Index (ASI) depreciated by 2,479.49 or 6.4 per cent to 38,667.90 from 41,147.39.

According to the investors, the government has to initiate new strategies to encourage investment inflow, attract more retail participation and increase market confidence especially at a time when the global and domestic economy is grappling with another pandemic.

The President of Standard Shareholders Association, Godwin Anono, said the government must be committed to creating an enabling environment for the long-term growth of the capital market.

He stressed the need for government to show concern for certain fiscal policies constraining the operations of the market and ensure that these concerns are addressed decisively.

He added that this would enable the exchange to become more attractive to investors seeking superior return, safety, and liquidity to increase their investment portfolios.

The President of Issuers and Investors Adri Initiative (IIADRI), Moses Igbrude, harped on the need for some taxes on capital market activities to be reduced or removed completely.

“We have in the past, advocated a downward review of withholding tax and the abolition of certain other taxes on capital market transactions hoping that a tax revenue foregone through lowered tax rates would lead to more savings.

“Not only increase in savings, but it would also lead to higher employment and growth in GDP, resulting ultimately in the expansion of the national tax base.”

He added that reduction and abolition of some taxes on capital market activities would enhance investment in the country.

An independent investor, Amaechi Egbo, accused the government of handling issues of the capital market with levity.

He noted that without a vibrant capital market, long-term capital formation critically required for the creation of domestic wealth and generation of productive employment would continue to elude the nation.

Therefore, he urged the government to replicate reforms done in other sectors of the economy in the capital market to facilitate market growth.

With many listed firms currently hitting 10-year lows, analysts have linked the downturn to a weak economy, delayed economic agenda, and uncoordinated fiscal and monetary policies that had kept many foreign and domestic investors on the sideline.

The Nigerian Exchange Limited (NGX) index in 2017, soared on seeming improvements in economic fundamentals that helped the exit from recession on the CBN’s exchange policy and intervention that attracted inflows after the market had witnessed declines for three consecutive years.

The analysts argued that the continued decline in the NSE’s ASI showed that the Nigerian economy is in dire need of an urgent stimulus that would revive the economy and bolster the capital market.

The chief research officer, Investdata Consulting Limited, Ambrose Omordion, said the persistent uncertainties and lack of economic direction have continued to dampen investors’ confidence.

He noted that the development has led to massive dumping and induced sell pressure on the equities sector in the last few years.