The chief executive of the Nigerian Exchange (NGX) Limited, Mr Temi Popoola, has advised the government to look into ways to attract companies to the stock market, stressing that more revenue could be generated from taxes paid by these firms.
According to him, companies on the stock exchange are more reliable with their tax compliance than other organisations, who sometimes evade tax, denying the government funds to grow the economy.
Speaking in an interview with CNBC Africa, Mr Popoola said the government could begin to explore the capital market and provide incentives that would encourage more listings in the country.
“The reality is that because listed firms must adhere to regulatory requirements and corporate governance standards in order to maintain their listing on the exchange, they are typically more consistent and reliable with their tax compliance. Consequently, the more companies we can get to list, the more revenue the government can make,” he said.
He argued that if the government took this suggestion, it would increase wealth, reduce poverty in Nigeria, and boost the tax revenue to GDP ratio, which currently stands at 6 per cent.
Mr Popoola disclosed during the interview that the bourse was looking to address some age-long issues bordering on new listings, which will, in turn, deepen trade.
Recall that in December 2022, the Securities Exchange Commission (SEC) approved NGX’s Technology Board rules which permit it to list fintech start-ups and tech companies on the exchange.
In order to push its digital transformation agenda, NGX had gone one step further and established an advisory panel on digital technology products. The panel would give the exchange a platform to communicate with the capital market community and the fintech ecosystem to enhance and increase NGX’s digital product offerings.
“We are interested in expanding beyond financial services, the construction industry and Telco. For instance, NGX admitted the first-Generation power company, Geregu Power Plc, on the exchange in 2022 and BUA foods which led to the deepening of the market and a fair representation of GDP.
“The Agric industry is one sector that has been often said to be underrepresented on the bourse. As we move to get such listings, we are also looking for companies and sectors with low representation in order to promote a market with equal representation,” he stated.
In a bid to diversify, Mr Popoola also mentioned an interest in exploring listings from free zone companies like the listing of the second tranche of the Lagos Free Zone N25 billion series 2 bonds, the first 20-year corporate infrastructure bond in Nigeria on the exchange.
Whilst citing ongoing projects within the Lagos Free Zone, which were projected to generate $461 billion in the next five decades, he added that NGX, in partnership with regulators, will be taking steps to accommodate more listings from free zones in 2023.
“Futuristically, we are looking at promoting financial literacy by exploring data dissemination through telco partnerships. We are also keen on aligning our activities to drive the UN SDGs and, more importantly, to promote the work we are doing in enabling a sustainable capital market ecosystem,” he said.
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