BY PETER EGWUATU

In order to encourage international companies to get quoted on the Nigerian Stock Exchange (NSE), Governor of Bauchi State, Alhaji Isa Yuguda, has called on the federal government to make it a mandatory condition for foreign entities to be publicly quoted before being considered for award of contracts.

Gov Yuguda

The Governor also called on the federal government to speed up the privatization exercise of its owned institutions to pave way for their listing on the Exchange so as to boost the Nigerian stock market capitalization which had been down swing since the global financial crisis that occurred in 2008.

Speaking at a public forum organized by Business Hallmark in Lagos, Yuguda said it was imperative for the regulators in the Nigeria capital market to ensure that confidence is restored in the market.

Also, to boost market capitalisation in the stock market, the Governor advocated tax holidays for new listings on the NSE in order to aid influx of liquidity in the market.

Yuguda, while addressing a public policy forum titled, “Restoring Market Confidence in an Era of Economic Uncertainties: Challenges and Prospects”, noted that offering incentives to growth sectors of the Exchange will further drive liquidity in the market and enhance restoration of investors’ confidence in the market.

He explained that if new listings are encouraged and given special concession like tax holiday for 2, 3 or 4 year period, it will aid the growth of many firms and flow of investments in the market.

According to him, “It is essential that companies are encouraged to get listed on the Exchange through various incentives, like making sure that the government gives them tax holiday for a period, while international quoted firms should be given priority for major contract as they indirectly contribute to the growth of the market and the economy through job creation”, he added.

He further noted that the insufficient liquidity in the system, inadequate investor protection, lack of market depth, loss of investors’ confidence in the capital market, attraction and sustenance of Foreign Direct Investments in the capital market are major challenges impeding the growth of the Exchange.

Delivering a lecture at the Public forum, Director General of the NSE, Mr Oscar Onyema, corroborated the views of the Governor on the need for tax holidays for new listings, stating that taxes on transaction fees should be reduced or eliminated in order to reduce frictional costs incurred in the course of trading.

He added that the Exchange has taken steps to revamp activities on the Exchange and would not relent in its effort to ensure that investors’ confidence is restored in the market.

He further highlighted that the NSE has already introduced a new market segmentation configuration which became operative on November 1, 2011 to aid investors’ decision making. The segmentation informs the construction of individual investment portfolios, in terms of asset allocation, providing investors the basic tools for understanding risk diversification.