Nigeria, UK group outlines fiscal measures to woo international investors

July 28, 2015 – The Nigeria-UK Capital Markets Project has outlined fiscal measures as part of efforts to boost investors’ confidence in the Nigerian Stock Exchange (NSE) and woo both local and international investors into the capital market.

The Nigeria-UK Capital Markets Project emanated from the Emerging Capital Market Task Force set up in April 2013 by Office of Chancellor of the Exchequer and Foreign and Commonwealth Office in the United Kingdom to boost investors’ confidence in emerging market economies.

The group made the revelation at its formal launch in Lagos by the UK Delivery Group led by former Lord Mayor of London, Sir Rogers Gifford, the Nigeria Delivery Group led by President Nigerian Stock Exchange Mr.  Aigboje Aig-Imoukhuede and the Lagos State Government.

Speaking at the event, Aig-Imoukuede said that the percentage of foreign investment into the NSE stands at 57 percent.

To be able to attract more foreign and local investment into the stock market, the Nigeria-UK Capital Market Project  team called on government to establish a broad industry platform, made up of industry participants, to represent their interests and develop initiatives to raise transparency, governance and performance standards across the industry and to canvas for relevant legislation and regulatory changes.

The group also recommended that government must boost the integrity of the markets to improve information disclosure, reduce potential for manipulation, promote transparency and good governance and generally improve standards and investors’ confidence.

It also called on government to reduce cost of capital markets transactions and to tighten the regulatory enforcement process through introduction of an efficient and reliable dispute resolution mechanism which the group said is central to secure investors’ confidence.

The group also highlighted the need for tax incentives to deepen capital market activity and focusing on market education, building capacity within market operators, as well as deepening the knowledge base of the retail investor community, which President of the NSE said is currently five million.

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In his remarks, Gifford said that stock market capitalization to GDP ratio in Nigeria, Brazil and  India is quite low hence they have great potential for investment. According to him, the ratio in Nigeria is about 22 percent compared to the UK which is above 100 percent.

He said that the UK market is worth $10 trillion and that the project is a product of six months of planning but that the 2015 general elections barely got into the way hence delay in inauguration.

Earlier in his remarks, Lagos State Governor, Mr. Akinwunmi Ambode said that government clearly understands the vital role it plays in providing investor protection and nurturing investor confidence through the delivery of an efficient judicial dispute resolution and arbitration system.

“We recognise the important role of tax incentives as a catalysts for greater capital flows into the capital markets”, he said.

The governor said he has taken note of the recommendations relevant to the Lagos State Government adding that he will do all it takes to work towards implementation of the report.