Finance Act Represents Landmark Achievement For Nigerian Capital Market‘

L – R: Olumide Bolumole, Head, Listing Business Division, The Nigerian Stock Exchange (NSE); Oscar N. Onyema, OON, Chief Executive Officer, NSE; Jude Chiemeka, Head , Trading Business Division, NSE; Wole Obayomi, Head of Tax, KPMG; Bola Adeeko, Head, Shared Services Division, NSE and Ajibola Olomola – Partner, Deal Advisory, M&A Tax ; Financial Services & Regulatory Services, KPMG during a symposium tagged “Finance Act 2020” at the Exchange, Lagos, on Monday, February 3, 2020


The Chief Executive Officer, Nigerian Stock Exchange (NSE), Oscar Onyema on Monday described the signing of the Finance Bill into law as a landmark achievement for the Nigerian Capital Market.
In a welcome address at a symposium held at the NSE, Onyema explained that since 2014, the Exchange alongside the Securities and Exchange Commission (SEC) as well as other capital market stakeholders have been at the forefront of advocacy with policy makers and tax authorities “for favourable tax structures for primary and secondary market activities in the Nigerian Capital Market”.
According to Onyema, this includes tax incentives for public companies and capital market investors, removal of double taxation in CIS and REITs as well as manufactured dividend in securities lending to mention a few.
He said: “The elimination of double taxation in Collective Investment Schemes (CIS) including Real Estate Investment Structures as pronounced by the act is expected to have a significant impact on the growth of the currently nascent $2.77Bn asset management industry in Nigeria.
“We have convened committees and conferences to dimension the real estate industry and the necessary policy changes required to jumpstart financing into the sector, and so this positive policy announcement is a good start towards increasing the viability of REITs for issuers and investors.
“With the nation’s housing deficit put at 17Mn units as estimated by the African Development Bank, I believe strongly that REITs and other real estate investment vehicles will play a critical role in funding real estate and infrastructure development in Nigeria.
We also expect an exponential growth in Securities lending activities which will further boost market liquidity given the elimination of tax on manufactured dividend arising from securities loan transaction. Whilst there have been some improvements with c.20million units of shares currently available for lending, the multiple taxation embedded in an SLB arrangement has slowed down its adoption in the Nigerian Capital Market despite being a $2.44Tn market globally.
“The recent amendment to the tax laws by the Finance Act 2019 is in line with global best practices for Securities Lending and I want to seize this opportunity to enjoin capital market operators and asset owners to take advantage of the benefits in expressing your views of the market via short or long positions.