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Economy

SEC Signs MoU With Morocco To Boost Market Growth

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sec capital market

SEC Signs MoU With Morocco To Boost Market Growth

By Modupe Gbadeyanka

The Securities and Exchange Commission (SEC) on December 3, 2016 signed a Memorandum of Understanding (M0U) with its Moroccan counterpart, Autorite Marocaine Du Marche Des Capitaux (AMMC).

The MoU, which was signed on the sidelines of the Nigerian- Moroccan bilateral talks marked with the visit of His Majesty, King Mohammed VI of Morocco, will serve as a platform for regulatory cooperation and information sharing between the two capital market regulators.

This is a first step towards achieving an effective cross border market policing between the two jurisdictions and enhanced market development through leveraging mutual comparative advantages.

The bilateral discussions covered a wide range of issues aimed towards deepening the mutual relationship between the two Countries. These included agriculture, aviation, immigration, banking, capital markets and the extractive industries, among others.

The Nigerian delegation was led by President Muhammadu Buhari with the SEC Director General, Mr Mounir Gwarzo, signing the MoU on behalf of the Country while Ms Nezha Hayat, CEO, AMMC represented the Kingdom of Morocco.

It is interesting to note that as members of the International Organization of Securities Commissions (IOSCO) which holds cooperation and integration as a cardinal objective, Nigeria and Morocco ordinarily has a platform to enter into bilateral agreements such as this as provided in the 38 IOSCO principles.

The involvement of the governments of both countries at the highest level is therefore a mark of the high premium placed on the importance of the capital market to the economic growth and prosperity of the two nations.

For Nigeria, this is a welcome development as it presents an opportunity to leverage the progress achieved in the Moroccan market to enhance especially the delivery of a few of the objectives of the 10 – year Capital Market Master plan.

This for example is especially as relates to deepening the asset management space of the market, an area of comparative advantage for Morocco.

The SEC Nigeria will also be understudying the advancements achieved by Morocco in growing the green capital markets which was the fulcrum of the COP22 conference recently held in Marrakech which focused on fostering green capital markets in emerging economies.

The signing of the MoU signals a strengthened cooperation framework between Nigeria and Morocco in areas of common interests as it will encourage cross investments in the respective capital markets.

It will also engender mutual recognition of regulations related to public offerings and professional certifications to facilitate dual listings and mobility of capital and labour between the two markets.

The signing of the MoU was a historic milestone for Nigeria as it is in clear tandem with moves around all regions of the world towards cooperation and market integration. Nigeria had earlier entered into such bilateral agreements with several other jurisdictions such as, Angola, China, Ghana, Kenya, Malaysia, Mauritius, South Africa, Tanzania and Uganda.

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

Economy

Nigeria Sells Retail Bonds for 13.26% at N1,000 Per Unit

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FGN Retail Bonds

By Modupe Gbadeyanka

The Debt Management Office (DMO) has commenced the sale of the Federal Government of Nigeria (FGN) savings bonds for December 2022.

The retail bonds are sold monthly to low-income earners and other interested investors as a way to raise funds from the capital market to finance budget deficits.

For this month’s sale, the debt office is offering the papers in the usual 2-year tenor and 3-year tenor at a coupon rate of 12.255 per cent and 13,255 per cent per annum, respectively.

Subscriptions for the notes started on Monday, December 5, 2022, and will close on Friday, December 9, 2022, according to details of the exercise released by the DMO.

The interest would be paid to subscribers quarterly, i.e., March 14, June 14, September 14, and December 14, while the bullet repayment would be made at the maturity date.

The savings bond is sold at N1,000 per unit, and investors are required to purchase at least N5,000 and a maximum of N50 million.

Intending investors would be expected to contact their brokerage companies on how to purchase the debt instrument.

The retail bonds are backed by the full faith and credit of the Nigerian government and are charged upon the general assets of the country.

The investment tool qualifies as a security in which trustees can invest under the Trustee Investment Act.

It is also a liquid asset for liquidity ratio calculation for banks and qualifies as government securities within the meaning of the Company Income Tax Act (CITA) and Personal Income Tax Act (PITA) for tax exemption for pension funds, amongst other investors.

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Economy

New Cash Withdrawal Limits Will Expose Tax Evaders—Oyedele

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expose tax evaders

By Adedapo Adesanya

The Fiscal Policy Partner and African Tax Leader at one of the country’s leading consultancy companies, PwC, Mr Taiwo Oyedele, has said the new cash withdrawal limits introduced by the Central Bank of Nigeria (CBN) would expose tax evaders, individuals and micro, small, and medium enterprises (MSMEs) in Nigeria.

In a series of tweets seen by Business Post, the tax maverick said that with the restrictions placed on cash withdrawals, many people would be forced to carry out transactions using electronic payments, and small businesses that currently operate mostly on cash would become visible to the tax authorities.

It had been reported the apex bank on Tuesday moved to limit the amount of cash withdrawals Nigerians can make with benchmarks placed at several channels, including over-the-counter, point of sales (POS), and automated teller machines (ATMs).

He explained that the policy would trigger various tax obligations, including income tax, value-added tax (VAT), and Pay-As-You-Earn for small businesses and individuals.

On Income tax, he wrote that “If your business is registered as a company, you may be liable to CIT depending on your annual turnover (i.e. no CIT if your turnover below N25 million, 20 per cent if your turnover is between N25 million to N100 million 30 per cent if your turnover is more than N100m) in addition to Education Tax at 2.5 per cent.

“If your business is not registered as a company, then you will be liable to personal income tax based on graduated taxable income bands between 7 per cent and 24 per cent.”

On VAT, he explained that, “All businesses are required to register for VAT and charge 7.5 per cent on their goods and services except those with annual turnover below N25 million.”

For PAYE, Mr Oyedele explained that employees earning more than N30,000 per month are liable to PAYE, which must be deducted and paid to the tax authority by the employer on a monthly basis.

To this, he noted, “You may also be liable to other statutory contributions such as pension depending on your staff strength.”

For individuals, he noted that as they carry out more transactions, this will make them susceptible to transparency as it will make it easier for the government to track those who are tax evaders.

“The more transactions you make electronically, the more the tax authorities will get the intelligence to track your income and net worth, making it easier to fish you out if you are a tax evader.”

He then advised small business owners to register with relevant tax authorities like the Federal Inland Revenue Services (FIRS) and the state internal revenue services where they operate.

Further, the PwC official called on SME operators to open a separate bank account for their business, “or dedicate one for that purpose if you already have a business account) and don’t mix business with personal transactions.”

The government, on its part, he said, needs to sensitise the general public, especially small business owners, adding that the CBN should ensure a proper handshake with the fiscal authorities.

“For instance, the conditions for excess cash withdrawals could include Tax Identification Number,” he opined.

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Economy

CBN to Establish Offshore Banking in Free Trade Zones to Boost Investment

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establish offshore banking

By Adedapo Adesanya

The Central Bank of Nigeria (CBN), in collaboration with the Free Trade Zone Authority (FTZA), has commenced moves to establish offshore banking in the zones in Nigeria so as to encourage investors to repatriate their returns from their businesses.

Speaking on the sideline of a three-day conference to mark the 30th anniversary of the Free Trade Zones in Nigeria, the Managing Director of the Nigeria Export Processing Zone Authority (NEPZA), Mr Adesoji Adesugba, disclosed that having offshore banking operations in the FTZs is a factor that would further boost investors’ confidence in the nation’s FTZs operations.

Mr Adesugba also said that offshore banking in FTZs is an international best practice that Nigeria must adopt to enhance investors’ operations in the FTZs.

“The CBN is in charge of processing offshore banking in the FTZs, and the FTZA and the CBN have met over the issue for almost two years, and we are still meeting. The document to establish the offshore banking operations is ready.

“We are just awaiting the approval of the CBN to commence operations in the Free Zones because Free Zones enterprises are not allowed to enjoy the facilities of the banking system in the Nigerian territory.

“So, we need an offshore banking system. There is no way you can do business without having a bank, so that is what we are asking for. It is high time we start that.

“Every other Free Zone outside Nigeria has that kind of system. It’s not new, but in Nigeria, we still don’t have it. It is an incentive for investors because that is the first thing they ask for when they come to the Free Trade Zones.

“The absence of offshore banking counts against us, so we are asking the Central Bank to please fast-track that for us to have it,” he said.

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