Boosting investment in Nigeria's capital markets
In a joint report published today, financial and professional services experts have made recommendations to boost capital markets and attract domestic and international investment in Nigeria.
The Nigerian Capital Markets Solicitors Association and the Law Society of England and Wales collaborated to undertake the six-month joint project, part of the UK Foreign Office's Emerging Capital Markets Taskforce (ECMT).
Report co-author and managing director of Arinae Advisory Samallie Kiyingi said: "Trust and confidence in capital markets transactions in Nigeria is needed to attract investors to the market. This is harder to establish where there are perceptions of shortcomings in standards. That is why it is necessary to adopt strategies specifically aimed at improving the ethical standards of operation in the capital markets as well as changing the perception of the standards that operate in the markets."
Report co-author and managing partner at Radix Legal Consulting Elizabeth Uwaifo said: "Our report recommends industry-led initiatives aimed at boosting investor confidence by improving operational standards and enhancing the regulatory regime. The blend of self-imposed regulatory standards and tighter market-wide regulations should generate increased market activity and provide business opportunities for domestic and international investors as well as service providers."
The report identifies four core issues affecting the growth of Nigerian capital markets:
A number of market and regulatory barriers are identified in the report, including:
-
high transaction costs
-
regulatory constraints
-
tax disincentives
The report recommends a number of both tax and non-tax reforms and incentives for greater market participation.
Law Society of England and Wales head of city and international Stephen Denyer said: "Solicitors have a key role in opening up capital markets. In addition to the important regulatory barriers that need to be overcome, the rule of law is central. Investors need to be confident that when disputes arise, laws will protect them and they will have a straightforward, fair and robust system for resolving disputes and providing compensation to investors where appropriate.”
"If the actions and recommendations in this collaborative report are enacted, there is a bright future for capital markets in Nigeria, which can only be good news for boosting the economy.
"We are delighted to have been able to assemble a team of leading lawyers from the UK and Nigeria to work with us on this project – the Law Society is ideally placed to bring together international legal talent in this way.”
Recommendations are made to address:
-
information disclosure and dissemination
-
insider dealing
-
market manipulation and conflict of interest
-
transparency and governance
-
market advisors' quality assurance
-
regulation of debt offers to institutional investors vs. retail investors
-
private placements involving the sale of securities
-
the relationship between financial markets regulators
-
dispute resolution and advocacy
-
competition regulation
-
market incentives (including tax and stamp duty)
-
non-tax incentives
-
transaction costs
-
tax barriers including double-taxation and bond securities tax exemption
-
transaction document review
-
issuer and product diversity
-
investor diversity
-
market education
