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NSE listing: Obstacles ICT firms must overcome, by Johnson

By Emeka Aginam

EVen with N70 billion budget appropriation for ICT in the current financial year, the Minister of Communications Technology, Mrs. Omobola Johnson has said that Nigerian ICT companies will only be more attractive for listing in the Nigerian Stock Exchange, (NSE) if certain bottlenecks including double taxation, right of way, site approval for base stations, among others were resolved with immediate effect.

The Minister who spoke recently at the quarterly Chief Executive Officer’s dinner at the NSE held recently in Lagos told the gathering that the Ministry was committed to making the Nigerian ICT firms more attractive for listing in the NSE through creation of enabling environment.

The overaching objective of the Ministry, she said was to increase the contribution of the ICT industry to GDP by 1 – 2 % by 2015, adding that there was need to stimulate demand of hardware, software and services through government procurement.

Short term approach
As part of short term goals, the Minister said that removing bottlenecks in the development of ICT infrastructure is a major condition for ICT firm to be listed in the Nigerian Stock Exchange.

According to her, Government approvals (right of way, site approval for base stations, illegal taxes and levies, new spectrum allocations and more efficient use finite spectrum resources and critical national infrastructure bill specific to ICT must be given priority attention as way forward.

Looking at short to medium term approach, the Minister said that the Ministry was actively working to reduce the price of devices and make more affordabe to drive demand for both software and services, adding that the Ministry was working to making duty and other waivers to curb illegal smuggling.

Long term low interest rates for device assemblers and lower interest consumer finance for ICT devices , she noted were among short to medium term approach. Also, as part of short to medium term approach, she disclosed that the Ministry would focus on skills and capacity building to increase skills and capabilities of players within the industry.

At present, according to Johnson, promising indigenous technology companies may be more suitable for the NSE’s secondary market, adding that this requires taking a longer term view for listing on the main board possibly 2015 – 2017.

Indian example
Government and capital market authorities in other countries, she said have provided incentives to encourage companies to offer their shares to the public, adding that as a developing country with an increasingly relevant and global ICT footprint, India is an insightful example.

Listing conditions
For companies in the Nigerian ICT space who do qualify for listing (i.e. Telecoms), she said that the growth in listings by ICT companies can be driven by a two-pronged approach including issues around control, disclosure, costs and market depth were given as key reasons for continued reluctance to list.

Incentives
These reasons, according to her can be addressed by an incentive programme that would encourage standardization and relaxation of regulatory requirements, adoption of international disclosure standards, flexible accounting standard requirements, fiscal Incentives among others.

Johnson also said that fiscal incentives such as offer of tax rebates and credits to listed firm will aid listing on the Exchange and structural Reform will be enabled by policies and programs that increase market depth thereby strengthening its viability.

Legislative requirements
In addition to legislative requirements that will support legislation which compels foreign companies which meet specified requirements to list on the national exchange.

She added that under the incentive program, key considerations should include Incentives to be made available to both foreign and local players across the industry to encourage specialisation and depth. She added that encouragement of investment by foreign players cannot be at expense of the growth of  indigenous players.

Under the legislative  considerations, Johnson stressed that specific focus on telecoms may incite feelings of being unfairly targeted, without the necessary incentives.

She added that there should be maintenance of a conducive business environment for telecomm companies to thrive.
“Given the current situation and the sector’s increasing appetite for local debt, bond listings could serve as an alternative source of capital for the more established medium to large telecoms players” she said, adding that the this option, while contributing to broadening and deepening the market, would not afford the Nigerian public the opportunity to gain part ownership of these successful companies.

This option, while contributing to broadening and deepening the market, she explained would not afford the Nigerian public the opportunity to gain part ownership of these successful companies. However, by structuring and listing the bonds as retail bonds, a significant percentage of the general public is still able to invest, she added.


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