The Chief Executive Officer of the Nigerian Stock Exchange (NSE), Mr Oscar Onyema has emphasized the importance of the newly signed Finance Act. He assured that the bill would have positive impacts on the market as he called on capital market operators to take advantage of the opportunities that abound in it.
Onyema said this while giving his welcome remarks at the Nigerian Stock Exchange symposium on Finance Act 2019.
According to Onyema, the signing of the Finance Bill into law represents a landmark achievement for the Nigerian Capital Market as stakeholders have in the past advocated for this cause. He made known that with this bill in place, there would be favourable tax structures for primary and secondary market activities in the Nigerian Capital Market.
Also, he said there would be tax incentives for public companies and capital market investors, removal of double taxation in Collective Investment Schemes (CIS) and Real Estate Investment Structures as well as manufactured dividend in securities lending, among others.
Onyema’s words: “The elimination of double taxation in Collective Investment Schemes (CIS) including Real Estate Investment Structures as pronounced by the act is expected to have a significant impact on the growth of the currently nascent $2.77 billion asset management industry in Nigeria.
“We have convened committees and conferences to dimension the real estate industry and the necessary policy changes required to jumpstart financing into the sector, and so this positive policy announcement is a good start towards increasing the viability of REITs for issuers and investors.
“With the nation’s housing deficit put at 17Mn units as estimated by the African Development Bank, I believe strongly that REITs and other real estate investment vehicles will play a critical role in funding real estate and infrastructure development in Nigeria.
“We also expect an exponential growth in Securities lending activities which will further boost market liquidity given the elimination of tax on manufactured dividend arising from securities loan transaction. Whilst there have been some improvements with c.20million units of shares currently available for lending, the multiple taxation embedded in an SLB arrangement has slowed down its adoption in the Nigerian Capital Market despite being a $2.44 trillion market globally.”
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Speaking further, the NSE CEO enjoined market operators and asset owners to take advantage of the Finance Act and its impact on their operations. He said some of the interests were tax incentives relating to investment in capital markets and the ease of doing business for companies.
Onyema also said the Finance Act is in line with the newly launched Growth Board introduced by the NSE to provide issuers, especially Small and Medium Enterprises (SMEs), with opportunities to leverage on the Exchange for listing, raising long term capital and facilitating liquidity in the trading of their shares.
“Furthermore, the pronouncement in the Finance Act which exempts micro and small enterprises with an annual turnover of N25 million ($70,000) or less from paying company income tax aligns with the Exchange’s commitment to SMEs as recently demonstrated with the launch of our growth board segment dedicated to fast-growing companies seeking to raise public capital. SMEs and growth companies in our ecosystem can now enjoy tax benefits thereby improving their operational efficiency,” Onyema said.