The Securities and Exchange Commission (SEC) and capital market stakeholders have enjoined the Federal Government to introduce pro capital market measures into the national budget to enhance the growth of the market.
This was part of the resolutions at the third Annual Budget Seminar of SEC with the theme, “Budgets, Elections and Capital Markets: Risks and Opportunities in 2019″ in Lagos, South-West Nigeria.
Specifically, Prof. Uche Uwaleke, Head, Banking and Finance Department, Nasarawa State University, Keffi said the government could intervene indirectly in the capital market by infusing pro capital market measures into the budget to accelerate the growth of the market.
Uwaleke said five emerging countries that currently have adopted these measures as part of the budget had recorded increased level of economic growth.
”Some emerging African countries have recognized that it is important to include pro capital market measures in the budget like reducing listed companies income tax and clauses that allow privatization through the capital market.
“Pakistan, for instance, is looking at reducing company income tax for listed companies, while India looks to privatize through the stock exchange.
“We must introduce pro capital measures in the federal budget. Government can intervene indirectly in the capital market by adopting these measures as part of the budget,” Uwaleke said.
Uwaleke stated that government as a necessity must encourage patronage of local produce which in the long run would assist the growth of companies listed on the equities market to compete favourably to deepen the market.
According to Ms Mary Uduk, Acting Director-General, SEC, the budget affects the economy as well the capital market, hence stakeholders, both local and foreign, are interested in the budget and try to analyse how it affects them.
“Investors also sit down and analyse the budget and that is why the capital market is looking at the impact of the budget and how the market can aid its implementation.
“The capital market is very important in funding for a lot of projects in the economy. It is important in raising these money to fund the budget. We want to be at the driving seat and contribute to the budget.
“We are interested in driving and contributing to this economy and that is why we are having this seminar.
“We believe there are a lot of opportunities for the capital market in this budget. There is need for us to sit down again as a capital market community and find ways of driving the budget,” Uduk said.
In his lead presentation, Head, Economic Research, SEC, Dr Afolabi Olowookere, said there were opportunities for equities and sub-national issuances and urged state governments to explore the capital market for funding of their projects.
Olowookere also called for lower domestic borrowing by the Federal Government to make room for private issuances.
He said some of the ways the budget could be funded included, “Creation of money market-based instruments and trading, commodity trading and derivatives, Investing in eligible companies under Tax Credit Scheme as well as attracting restructured oil assets to list.”
Amaka E. Nliam