By Chukwuma Umeorah
The Managing Director of Arthur Steven Asset Management Limited, Olatunde Amolegbe, has urged the Federal Government to promote listings on the nation’s bourse, emphasising the potential for boosting capital market participation and tax revenue generation.
Speaking at the Capital Market Correspondents Association of Nigeria (CAMCAN) forum in Lagos on Tuesday, Amolegbe highlighted the importance of encouraging the listing of companies with government holdings, both direct and indirect, as well as those engaging in business with the government.
He asserted that such measures would not only deepen the capital market but also enhance transparency and contribute to increased tax revenue in the country. This is even as he pointed out the disparity in Nigeria’s market capitalisation to GDP ratio, standing at 13 per cent, compared to over 50 per cent observed in many other countries emphasising the need for greater participation of major companies in the Nigerian capital market.
“As against over 50 per cent market capitalisation to Gross Domestic Product (GDP) as seen in many countries, Nigeria’s market capitalisation to GDP stands at 13 per cent. This is an indication that majority of the big companies in the country are not participating in the Nigerian capital market,” he said.
He specifically called on the government to encourage companies with direct holdings or significant business ties to list on the market.
“I believe the government needs to consider urging companies, particularly those they have 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 the government; the more transparent the listing, the more tax revenue,” he explained.
Expressing optimism about the potential listing of Dangote Refinery and NNPC Limited, the capital market expert further suggested that such listings would significantly boost the capitalisation of the Nigerian capital market.
However, he also addressed the pressing issue of insecurity in the country, noting its adverse impact on the supply chain and contributing to rising inflation rates.
“Insecurity is a major issue, and the government needs to work on it as it is disrupting the supply chain and this contributes to the increase in inflation rate.”
He added, “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.” which he noted would play a crucial role in determining the capital market’s performance by the end of the year.
Amolegbe suggested that “if liquidity improves and prices stabilise, organisations can plan more effectively; otherwise, 2024 might pose challenges for many quoted companies.”
Reflecting on 2023 where the market performed exceedingly well, breaking its records and setting new standards, he highlighted that the major events that defined market performance included, the smooth transition of government, the partial removal of subsidies, the unification of foreign exchange, and an increase in the monetary policy rate.