The Association of Issuing Houses of Nigeria (AIHN) has called on the federal government to extend the exemption of Value Added Tax (VAT) on capital market transactions which expired recently.
This is even as the association announced that its 2019 annual general meeting (AGM) and second edition of its annual dinner and award night will hold today.
AIHN made the call in Lagos at a press conference on Tuesday, with the focus on the state of the capital markets and the Nigerian economy.
The body explained that the grant which came into effect in 2008, as the federal government’s intervention during the capital market crisis, expired last month, saying a continuation of the extension was clearly needed as VAT being a consumption tax should not be applicable to investment products.
Speaking at the conference, the President of AIHN, Mr. Chuka Eseka, stated that consistently high interest rate especially on short-term risk-free instruments was among the challenges confronting the operators in the industry.
Eseka described that as, “a disincentive to a long term investments and unfavourable to our equity capital markets; the wellspring of risk capital formation in any economy.”
He said: “A gradual but consistent reduction in risk-free interest rates is Clearly desired and we are not unaware of the challenges faced by the economy which forces a tight monetary policy regime.
“Nevertheless, we believe that as the federal government continues to diversify its loan portfolio, the need for fiscal and monetary policy alignment to prevent crowding out the capital market cannot be overemphasised.
“AIHN in addition, recognises the need to incentivise equity listings in the Nigerian capital market. The Initial Public Offers (IPO) market has been abysmal in the last five years with not a single concluded transaction in 2018 and only one (a minority stake sale) thus far in 2019.
“Favourable tax structures for the capital market is recommended.”
The association also tasked the federal government to sustain its ease of doing business reforms in the regulatory environment (Enabling Business Reforms and Regulatory Environment) and continue to provide incentives that would catalyse domestic institutional participation in the capital markets, boost market liquidity and attract foreign flows.
It added that industry regulators such as NAICOM and PENCOM must realise that their insurance and pension sectors form a core part of the demand side of the capital markets and are key elements in achieving sustainable economic growth.
It therefore, urged the federal government to inaugurate the board of the National Pension Commission (PENCOM) just as it recently inaugurated the board of the Securities and Exchange Commission (SEC).
AIHN also said the capital market was still awaiting the Presidential assent to the Company and Allied Matters (Repeal and Re-enactment) Bill 2018.
It stressed that the CAM Bill provides for insolvency, bankruptcy and netting clauses among others, which go a long way in mitigating the risks associated with capital market transactions, promoting financial stability and boosting both domestic and foreign investor confidence in Nigeria.
Meanwhile, the AIHN said its annual general meeting (AGM) and 2019 annual dinner and award night will hold on August 1, at the Civic Centre, Victoria Island, Lagos.
According the association, the Vice President, Prof. Yemi Osinbajo, would be at the dinner, while the Governors of, Lagos, Niger and Edo States would be in attendance.
The group also said three categories of award will be given at the event including the Capital Market Titan Award which will be conferred on the President of Dangote Group, Alhaji Aliko Dangote.