The former President of the Chartered Institute of Stockbrokers (CIS) and the Managing Director/Chief Executive of Arthur Steven Asset Management Limited, Mr. Olatunde Amolegbe, has urged the Federal Government to actively promote listings on the nation’s bourse, aiming to enhance capital market participation and bolster tax revenue generation.
Amolegbe stated this during his address at the Capital Market Correspondents Association of Nigeria (CAMCAN) January forum in Lagos, themed “Review of 2023 Market Performance and Outlook for 2024,”.
Companies with direct or indirect government holdings
Amolegbe emphasized the significance of encouraging listings, particularly for companies with direct or indirect government holdings and those engaged in government-related transactions.
He stressed that such an initiative would not only deepen the capital market but also foster transparency, subsequently contributing to an increase in tax revenue within the country.
Highlighting a notable disparity, Amolegbe pointed out that while many countries exhibit market capitalization to Gross Domestic Product (GDP) ratios exceeding 50%, Nigeria’s ratio stands at 13%.
This observation, he asserted, signals a lack of substantial participation by major companies in the Nigerian capital market.
- “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 who noted that the capital market ensures transparency for listed companies said increased listing would increase tax revenue for the government.
- “I believe the government needs to consider urging companies particularly those they have a direct holding in and those that have a 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 government; the more transparent the listing, the more tax revenue, he said.
Listing of Dangote Refinery and NNPC Limited
Expressing optimism on the listing of Dangote Refinery and NNPC Limited, he said it would boost the capitalization of the Nigerian capital market.
Rising spate of insecurity in the country
He also charged the government on the rising spate of insecurity in the country saying until it is addressed, inflation would continue to soar and investors would 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 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.
Foreign exchange
He added that foreign exchange would be a significant contributor to where the capital market would be by the year-end.
- “If liquidity improves and price stables, organizations 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 performance in 2023 as a smooth transition of government, the president’s inaugural speech, enactment of partial removal of subsidy, unification of foreign exchange, and increasing monetary policy rate.
