To boost capital market participation and tax revenue generation, the Federal Government has been tasked with encouraging listings on the nation’s bourse
The Managing Director/Chief Executive of Arthur Steven Asset Management Limited, Mr Olatunde Amolegbe, while highlighting companies in which the government had direct or indirect holdings as well as companies that did business with the government, noted that listing more companies on the local bourse would not only deepen the capital market but engender transparency and boost tax revenue in the country.
Amolegbe made the assertions on Tuesday at the Capital Market Correspondents Association of Nigeria (CAMCAN) January forum in Lagos with the theme “Review of 2023 Market Performance and Outlook for 2024.”
He said that as against over 50 per cent market capitalization to gross domestic product (GDP) as seen in many countries, Nigeria’s market capitalization to GDP stands at 13 per cent.
“This is an indication that the majority of the big companies in the country are not participating in the Nigerian capital market,” he said.
Amolegbe, former President of the Chartered Institute of Stockbrokers, who noted that the capital market ensures transparency for listed companies, said the increased listing would increase tax revenue for the government.
“I believe the government needs to consider urging companies, particularly those they have direct holdings in and those that have huge business with the government, to list on the market.
“A lot of businesses are not listed on the exchange, and they do business a lot with the government; the more transparent the listing, the more tax revenue, he said.
Expressing optimism about the listing of Dangote Refinery and NNPC Limited, he said it would boost the capitalization of the Nigerian capital market.
He also charged the government with the rising spate of insecurity in the country, saying that until it is addressed, inflation will continue to soar and investors will remain wary of investing in the country.
“Insecurity is a major issue, and the government needs to work on it as it is disrupting the supply chain and contributing to the increase in the inflation rate.
“Farmers are not unable to produce, and the ones that can produce can’t get to market,” Amolegbe said.
“As long as the environment is seen as unstable, investors, both local and foreign, will continue to be wary of investing, leading to a further decline in foreign exchange inflow,” Amolegbe said.
He added that foreign exchange would be a significant contributor to where the capital market would be by year-end.
“If liquidity improves and prices stabilise, organisations can better plan.
“If not, 2024 might be a dicey year for a lot of quoted companies,” he said.
On the 2023 market performance, he noted that the All-Share Index closed the year at 74,773.77 points while the market capitalization closed at N40.918 trillion.
Amolegbe listed the events that underpinned the market’s performance in 2023 as a smooth transition of government, the president’s inaugural speech, the enactment of partial removal of subsidies, the unification of foreign exchange, and an increasing monetary policy rate.
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