Chairman of the Association of Securities Dealing Houses of Nigeria (ASHON), Mr. Sam Onukwue, has emphasized the need to implement significant reforms to draw investors to the capital market as investors start to consider the possible ramifications of the impending presidential election.
He claimed that issues with security, the pace of inflation, and the taxation of financial instruments, particularly the Capital Gains Tax (CGT), deter investors and need to be addressed.
He claims that the government’s handling of its debt, funding of the budget deficit, privatization of failing parastatals, successful elimination of the fuel subsidy, and overall monetary policy stability, among other things, will affect the investment climate this year.
“I think there are still lots of people that want to do business with Nigeria. They require a monetary policy environment that is welcoming to investors. However, instead of selling it directly to core investors, the future administration should manage parastatals like NNPC and get it listed on a securities market to solve issues like security, inflation, debt servicing, and fuel subsidy reduction. We’ve noticed a sizable gap in this year’s budget, and we hope the government will use the capital market to finance the shortfall, according to Onukwue.
He praised the over 20% gain generated by NGX in his analysis of the market for the previous year. He continued by saying that if not for the ongoing revisions to the Monetary Policy Rate (MPR), the growing inflation rate, and the erratic exchange rate that characterized investment activities during the review period, the market would have made more money. He did, however, express confidence that increased investment opportunities will result from a more stable monetary policy environment.
As a result of the government making certain key decisions that affected the market, the financial market was unstable for the majority of 2022. Investors were obliged to search for better interest margins due to the Monetary Policy Rate’s (MPR) constant movement. At the time, inflation was rampant, and people were searching for true value. The exchange rate was a problem because local investors controlled the market while overseas portfolio investors withdrew. We may argue that local investors are growing more confident in the market, but on the other side, foreign investors fled the market since they were losing money.
“The impact of the Russian invasion on the world economy was disruptive. Nevertheless, despite the difficulties, the market did okay. Investor expectations and uncertainties will be significantly impacted by the upcoming presidential election. They might fare better, though, given the strong third-quarter results of many businesses. For the first time in 11 years, the rate of inflation has slightly decreased. We anticipate that this will continue,” Onukwe stated.
