Lengthy tax holidays will be used to encourage investors to commit to Nigeria’s economic development – Minister

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Nigeria has adopted an annual financial management policy that entails simultaneous use of national budget and a corresponding separate Act of the National Assembly, ‘Finance Act’, to stimulate and manage national economic growth.

President Muhammadu Buhari had on January 13, 2020 signed the maiden ‘Finance Act’, Finance Act 2019, which was aimed at supporting the 2020 budget.

Minister of Finance, Budget and National Planning, Dr. Zainab Ahmed, yesterday in Lagos said henceforth every Appropriation Bill will be accompanied by Finance Bill in a more dynamic way that provides government with flexibility to manage economic development.

Ahmed spoke during a visit to the Nigerian Stock Exchange (NSE), where she was honoured with the ceremonial beating of the closing gong for the day’s trading session. Ahmed was accompanied by Ms. Mary Uduk, Acting Director-General, Securities and Exchange Commission (SEC) and Dr. Sarah Alade, Special Adviser to the President on Finance and Economy, among others.

She explained that the government will use the Finance Act to address specific economic challenges including immediate policy reforms and incentives for identified sectors of the economy in line with the overall fiscal objective of the government.

She pointed out that while the Finance Act 2019 had provided many incentives, the next Finance Act will make provisions for incentives that would further make the capital market more attractive to investors.

According to her, the government would introduce more tax incentives to boost investments in the Nigerian capital market while working with all stakeholders to initiate and implement policies that will enhance the growth of the market.

She noted that the capital market is regarded as the growth engine of any economy and assured that the government will continue to work with the NSE and other stakeholders in order to encourage more Nigerians to invest in the domestic capital market.

Ahmed however clarified that government incentive policy will henceforth apply to only investors that have evidently invested and contributed to national economic growth through job creation, investment through the capital market and compliance with rules and regulations.

“Going forward, we are committed to moving away from blunt and expensive fiscal incentives – like import duty waivers or lengthy tax holidays – that reward investors merely for their intention to invest. Rather, we will design, and implement targeted and more efficient fiscal incentives that reward investors after they have kept their promises to invest, create jobs, deepen our capital markets, and abide by applicable rules and regulations,” Ahmed said.

She added that the national fiscal reforms will increasingly complement national trade and monetary policies.

She said the government has made tremendous progress in its effort to create a conducive business environment for all investors adding that the target is to move Nigeria into the top 100 on the 2020 World Bank’s Doing Business Rankings.

“It is our expectation that this enabling business environment will spur the industry, innovation and investment that our people, world over, are renowned for and accelerate our industrialisation in the light manufacturing, agro-processing, petrochemicals and construction sectors, which seek capital for investment from the NSE,” Ahmed said.

She urged the private sector to partner with the government to ensure that fiscal, trade and monetary policies, as well as developmental programmes and projects, succeed in unlocking the latent potential of Nigerians and other natural endowments, in line with the developmental aspirations under the Economic Recovery and Growth Plan (ERGP) and successor economic plans.

Responding to the capital market operators’ request to defer the planned recapitalisation exercise in the market, Ahmed said, it would make them stronger and compete better in the market.

According to her, with the impending demutualisation of the NSE, stockbroking firms would have more businesses to do and therefore need to recapitalise to operate better.

Also responding to comments by stockbrokers that many ministers had in past come to the NSE with many promises without fulfilling them, Ahmed assured that her visit would be different because she is committed to ensuring that the capital market is used to unlock the economic potential of the country.

In his welcome address, Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr. Oscar Onyema commended the government for its return to the January – December budget cycle, which raises the chances of higher budget implementation and the Finance Act 2019, which contains incentivising clauses for investment in the capital markets.

He noted the need for all stakeholders to redouble efforts aimed at accelerating national economic growth citing the forecasts by multilateral agencies and national bodies that imply that as a nation, Nigerian economy must grow at between eight to 10 per cent and inflation should come down to single digit rates, if it must enjoy robust real per capita income growth.

“This is not a short-term task but a long-term one and we look forward to the sequel to the Economic Recovery and Growth Plan (ERGP) to address this existential economic threat of a sustained slow growth. Suffice it to say that the government’s fiscal and monetary reforms over the past two months have shown some intent at tackling the nation’s challenges. In particular, we note the clauses in the Finance Act 2019 and how they better recognise the income generating status of micro, small and medium scale enterprises – thereby taxing them appropriately,” Onyema said.

He assured that as the NSE transforms operationally and institutionally, it is confident in becoming even better positioned to support the government in raising the right-sized and long-term developmental capital required for financing its economic objectives.

According to him, apart from supporting capital raising efforts of government through innovative products such as the green bonds, the NSE has also developed a framework that supports the issuance, listing and trading of tax credits; in order to complement the road infrastructure development and refurbishment investment scheme.

“We are equally positioned to unlock significant investment value for the nation through the listing of public utilities and state-owned enterprises, as well as promote the knowledge economy in terms of public sector capacity building through our technology-based learning management system – the NSE X-Academy. Finally, through our government relations activities we will continue to partner and engage with the government to advocate for policies that deliver an enabling business environment for the Nigerian capital market and the economy at large,” Onyema said.

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