Popoola: Capital Market Stands to Gain From 2021 Finance Act

Kayode Tokede 

The Nigerian Exchange Limited (NGX) has said collaboration and engagement with stronger voice will help to address several policy changes recently affecting the capital market.

The CEO, NGX, Mr. Temi Popoola, disclosed this at the Nigerian Economic Summit Group (NESG) Fiscal Policy Roundtable held yesterday.

Speaking at the webinar tagged ‘impact assessment of the 2021 Finance Act’ organized by the Nigerian Economic Summit Group, Popoola commended the economic policy direction of the current administration citing the passage of the Petroleum Industry Act and the 2021 Finance act as indications of the government’s commitment to drive non-oil revenues into the country.

The CEO of NGX said the tenets of the 2021 Finance Act brought a lot of more clarity on investment such as the Real Estate Investment Trust (REIT), Capital Gain Tax (CGT) and Securities Lending transaction. Investing in real estate investment brings a lot of potential gain, saying that “If you look at our market today all our assets class has help to boost investors’ confidence.”

Further highlighting the direct impact of the act, Popoola stated that the introduction of the capital gains tax on transactions over 100 million naira is a welcome development in line with the government’s drive towards an increased tax bracket. He however cited that the policy might have the adverse effect of discouraging high-end investors including institutional investors.

According to him, as retail investors were the primary drivers of the market in 2021 and largely fall below the N100 million cap, this policy should drive further participation by those in this category.

He also noted the potential macroeconomic effects of the finance act including the introduction of excise taxes on Non Alcoholic beverages and the Education tax and the potential impact on the abilities of the affected entities to raise capital and pay dividends to investors citing the timing and recovering economy as factors that may influence this.

He, however, noted that overall, the law serves to boost the capital market and the economy reiterating NGX’s commitment to adhering to government policy and driving growth in the capital market.