By InvestAdvocate

Lagos (INVESTADVOCATE)-Stockbrokers in the Nigerian Capital Market (NCM) recently called on the Federal Government (FG) to give tax incentives to Quoted Companies as a way of boosting the Market.

Ariyo Olushekun, new President/Chairman, Chartered Institute of Stockbrokers (CIS), at his investiture ceremony in Lagos Nigeria said tax incentives would make Listed Companies to remain quoted, while new ones would be encouraged to access the Market.

“Tax incentives involving Company Tax should be applied to Quoted Companies while Valued Added Tax (VAT) and Withholding Tax should be eliminated or significantly reduced for Market transaction. Stamp duty, I dare say, is no longer relevant and thus should be eliminated,” he said.

According to him, in order to revive the Capital Market, Interest Rates should also be managed very well, outstanding margin debts issues should be resolved and investor education intensified.

Olushekun affirmed that the current high Interest Rates Regime is harmful to productive activities and is equally affecting the patronage of the Capital Market.

“High interest rates impair ability of business to launch new projects and products, reduce profitability of Companies (Quoted and Unquoted), threaten loan repayment by borrowers and drive fund away from active entrepreneurship to passive investment in Risk Free Government Securities” he said.

Olushekun further affirmed that if Gilt-Edge and Tax-Free Government Bonds can yield in excess of 15 percent (15%) in an economy with 12% inflation rate, risk-averse investment practice will be the order of the day.

“Hence, it will be difficult for the Capital Market with a recent history of depression to play its role of pooling savings for developmental purposes,” he said.

According to him, Stockbrokers’ are seeking the establishment of a Stabilisation Fund, “it would   fast-track the revival of the Market” he said.

The CIS President explained that similar to the quantitative easing being implemented in some developed economies, it’s essential that Asset Management Corporation of Nigeria (AMCON) or any special body was empowered to intervene in the Market by purchasing and warehousing undervalued Securities with strong fundamentals.

“These can subsequently be sold at a profit in systematic and orderly manner. This matter is crucial as domestic investors have abandoned the Market having lost money in recent past. If we cannot bring them back, quickly enough, we should not leave the Market at the mercy of foreign portfolio investors who have more options available to them and can quickly bring volatility to the Market from their country’s allocation actions,” he said.

He assured that the Institute was ready to cooperate with other Market Institutions to restore the Nigerian Capital Market to its glorious days.

In the same vein, Mike Itegboje, the Immediate Past President, commended the Stockbrokers for their support during his tenure from 2010 to 2012 and called for a similar support for the New President.

He said during his tenure, the CIS recorded some achievements including Insurance Policy for members, new Educational Programmes, award of excellence to Quoted Companies, Registrars that Stockbrokers interface and interact with, revival of Annual Dinner/ Awards and improved package of remuneration for staff members.