Stakeholders task new economic team on growth
•Allege neglect of stock market, want investment-friendly policies
Capital market experts have renewed call for government to articulate policies that would induce activities in the various segments in the stock market and attract more listings in 2020.
Besides, the new economic team appointed by the President has been challenged to take up the country’s tottering growth and offer the Federal Government a realistic measure and option to revive the ailing economy.
The stakeholders, who expressed dismay over what they described as “abysmal neglect” of the capital market, stressed the need to prioritise the sector and unlock its potentials.
According to them, despite efforts by the Securities and Exchange Commission (SEC) to undertake a number of initiatives to boost investors’ confidence, the capital market continues to trail behind its peers in other countries in volume, liquidity and sectoral representations.
Integrating the Nigerian capital market master plan into the country’s Economic Recovery and Growth Plan (ERGP) will position the market for sustainable growth, they said, would be an option.
Regrettably, government’s ERGP seems not to recognise the place of the capital market in capital formation and economic growth, as throughout the 140-page ERGP document, no mention was made of government’s plan for the capital market.
The stakeholders, therefore, suggested that government must replicate the successes recorded in other sectors of the economy on the capital market to grow the economy.
The Chairman of the Nigerian Stock Exchange (NSE), Abimbola Ogunbajo, in a panel session of GTI Trustèes Limited, in Lagos, re-emphasised that government’s ERGP seems not to recognise the place of the capital market in capital formation and economic growth.
He maintained that for the nation to boost the tax base and shore up revenue, there is need to expand the market by attracting new listings.
“We should situate where capital market lies in terms of priority. There is nowhere the capital market was mentioned in the ERGP and there is no capital market advocate and representative in the economic team.
“If we recognise that the middle class is the engine room of every economy, we must expand the number the number of companies listed on the exchange. We need to expand the market by seeking new listings for them to pay more taxes,” he said.
The Managing Director of Signet Investments and Securities Limited, Oladipo Aina, urged government to reconsider its stance on Value Added Tax (VAT) to encourage local investors, who are already bowing to heat of selling their shares due to poor state of the economy and low purchasing power.
He said the reintroduction of the tax charge on the market is expected to cause more apathy towards the already bearish market as a few investors already complain of the high transaction charge on their stock market transaction.
“We expect the government to jumpstart privatisation. There is need to encourage investors. The VAT charges must be extended. It is not the broker that will pay for the charges, but the investor.
“With the stage we are currently in the stock market, we need to encourage investors to begin to participate in the market. Government must remove the VAT so that investors would be encouraged to come back to the market,” he said.
The President of New Dimension Shareholders Association, Patrick Ajudua, said the capital market has been on decline in the past few years due to lack of strong economic road map.
He insisted that government must establish strong economic road map that would be driven by the new economic team, expressing the hope that it would stimulate activities in various sectors of the economy and revive the capital market.
The Chief Executive Officer of Sofunix Investment and Communications, Sola Oni, advised the new economic team to come up with appropriate policy framework to align fiscal and monetary policies, especially, where there are disconnects.
“On the composition of the new economic management team, one can heave a sigh of relief that every member of the team is a game changer. The members should address the issue of domestic fund mobilisation through measures such as realistic interest rates on domestic savings, holistic integration of informal activities into formal sector and more efficient banking and insurance sectors,” he said.
Furthermore, he underscored the need for the team to propose strategy for easy access to domestic credits by investors, while provision of relevant incentives for domestic and foreign investors should be addressed.
“The members should conduct impact analysis on Economic Recovery and Growth Plan (ERGP) for enhanced implementation. They need to engage with the capital regulators and operators to identify measures to leverage the capital market to boost economic growth and development.
“The team should reverse the recent increase in Value Added Tax (VAT) without further delay as it will do more harm than good in the present circumstance. In advanced economies, people pay tax with ease because infrastructures are provided to aid economic and entrepreneurial activities.
“But it is a reverse logic in Nigeria where majority of private sector operators are struggling to survive and purchasing power of consumers is shrinking by the day. The whole situation makes tax issues appear punitive,” he added.