A capital market professor, Uche Uwaleke urged the federal government to take advantage of the capital market to finance its capital projects.
Uwaleke gave advice at the symposium and book launch on Wednesday in Abuja.
Available data indicates that Nigeria needs about $3 trillion to close its infrastructure gap.
Nigeria’s first capital market professor said it was important for the government to look to the capital market for much needed funds.
“And I am happy to see that the National Development Plan (PND) gives a lot of weight to the private sector in terms of infrastructure financing. We understand that about 30% of the size of the NPD will be largely supported by the private sector,” he said.
While acknowledging the improvement in the regulatory environment, Uwaleke said, there is a need to further strengthen and support the supreme regulator, the Securities and Exchange Commission.
Support, he said, should come in the form of adequate funding for the SEC to enable it to carry out its mandate effectively.
“We know that the Apex regulator relies on funds from the market and there is a limit to which you can push the apex regulator to rely on funds from the market, otherwise it becomes counterproductive. You discourage investment, you discourage issuance and you also discourage demand for securities, ultimately you lose now.
“FIRS should also support all efforts to ensure tax incentives are used to incentivize the capital market, they should support that. In Jordan for example, if you are listed on the stock exchange, part of the cost of listing is tax exempt for you. It is also possible to say, if you are registered, the first year it is possible to exempt you from paying tax.
“Another option to also consider is to have a differentiated tax regime that favors listed companies. For example, we know that corporate tax for large companies is 30%, we can say for example, let listed companies pay 29%, this is a way to encourage them and the government will not lose revenues, you know why, because the more listings we have, the more companies there are that are more transparent and less susceptible to tax evasion and avoidance.
It is common knowledge that most of the taxes that this country collects today come from listed companies, i.e. 50% of the corporate tax that FIRS collects from listed companies. Thus, the more companies listed there, the more money the government receives.
“It is important that we encourage listing by reducing the sums paid by listed companies. Going forward, the government should consider some of these issues. We saw that when MTN did a show, we saw that it was oversubscribed,” he said.
He also asked the National Assembly to remove certain organizations from the list of those who should return their operating surplus.
“I also think that certain agencies that are critical should be exempted from these omnibus laws, if you will, one of which is the SEC, to make sure that it is adequately funded, so that the bulk of the funding not be transferred to the market,” he said.