Nigeria’s Securities and Exchange Commission (SEC) has advocated some measure of fiscal incentives for listed companies on the Nigeria Stock Exchange (NSE) in order to mitigate their cost burden and encourage more entities to list shares on the bourse.
Mary Uduk, SECs acting director general advocated the fiscal incentives on the sidelines of the Alliance Law Firm’s Maiden Lecture Series, Luncheon and Book Presentation in Lagos.
Represented at the event by Edward Okolo, director zonal offices coordinating department (ZOCD), Uduk believes that creating some form of fiscal incentives for listed entities will add further mileage to ongoing efforts to improve corporate governance in the country.
She cited experiences with some investors in the manufacturing sector, who claimed that despite fulfilling their fiscal obligations, the nation’s public procurement and contractual processes had continued to favour foreign companies to their disadvantage.
Apart from reduction of costs, the measure will translate to huge investment benefits to shareholders and also further position the quoted companies to contribute more to national development through improved capacities and job creation potential.
“Our case for fiscal incentives for listed companies on the NSE is actually based on experience. What we are saying is that Nigerian companies doing the same business these foreign companies are doing if they are listed should be encouraged in terms of public procurement or whatever government is doing.
“We don’t want to keep taking from them because they incur a lot of cost and you cannot reduce the cost more than a limited amount of percentage. The best is to begin to give them some incentives and with that you have more companies coming to the market, you have more jobs and then people will have dividends of investing. You must have companies to regulate and if people are not coming to the market, then who are you going to regulate?”
She stated that if such incentives are in place, the market would create jobs.
“If you go to Brazil, you go to Asia you see small scale companies coming to the market. You see fund managers and others playing the roles they are supposed to play. So, we need those incentives to encourage them to come to the market” Uduk added.
At the end of the day she said, Nigerians would get the value in terms of dividend payout if the company is listed adding that there should be incentives for companies coming out to get listed so that there could alternatives to savings by Nigerians.
Uduk disclosed that the level of compliance with the SEC Code 2011 remained low even as provisions relating to independent directors’ roles were being violated by some companies.
In addition, the SEC’s boss lamented that access to critical indices by which companies’ compliance with the SEC Code could be measured remained difficult as many companies were either unwilling to comply or lack understanding of the importance of corporate governance to their entities’ survival and profitability.