Economy
Shareholders’ Group Explains Effects of 5% VAT on Stock Market, Economy
By Dipo Olowookere
On Thursday, July 25, 2019, the payment of five percent Value Added Tax (VAT) on commissions earned by dealing members on traded values of shares, resumed after being suspended five years ago by federal government.
Weeks before the resumption, stockbrokers had been sending notices to their clients on the development and there had been calls for an extension of the ‘tax holiday’.
One of the registered shareholders groups in the Nigerian capital market, the Ibadan Zone Shareholders’ Association (IZSA), has urged government to suspend the VAT payment for now, especially when the market is battling with bearish runs.
The organisation warned that if government refuses to do something about this issue urgently, there could be consequences for the stock market and the economy at large.
In a statement jointly signed by its Chairman and General Secretary, Mr Akinduro Eric Akin and Mr Ayoola Gilbert Olufemi respectively, the group said the present low business activity in the market was a good reason for government to reconsider it stand on VAT and put it on hold so as to continue to encourage local investors bowing to hit of selling their shares.
It noted that the continued market decline was a clear indication that something was critically wrong with the Nigerian economy, especially looking at the mixed macroeconomic indices revealing very weak economic fundamentals, in the form of low market liquidity and absence of a policy direction.
According to the organisation, the market was already saturated with various taxes and commission on transactions and the inclusion of VAT would further send negative signals to the investment community, resulting in the loss of shareholders value, which will further discourage many investors from investing in the market.
“Recent statistics shows that return on our investment has been discouraging vis-à-vis capital appreciation.
“In view of this and on behalf of the entire members of the Ibadan Zone Shareholders Association, we do hereby request that the Federal Government of Nigeria should extend the VAT exemption pending the time we have robust economy,” the group said in the statement obtained by Business Post.
Commenting on the negative effect the VAT could have on the market if government refuses to listen, IZSA said “the shareholders community is of the opinion that the news on the resumption of value added tax by the government portrays a bad policy for the growth of the Nigerian capital market in recent times considering persistent decline that has overrun activities at capital market.”
“Also, [it] signals the insensitive of government to the plight of investors and development of small and medium scale enterprises in Nigeria.”
The group noted in the statement that since the year began, foreign investments inflow into the Nigerian stock market stood at N41.2 billion for the month of June 2019 compared with N37.9 billion in the month of May.
“This is the highest foreign investment inflow into the stock market this year. Unfortunately, this is not what matters.
“Foreign Investors shipped out N52.4 billion in investments out of the country compared to the inflow of N41.2 billion.
“In fact, foreign investment outflow has outpaced foreign investment inflow every month since January 2019. The Nigerian stock market has come to rely on foreign investment to drive up market values,” it said.
“In total, foreign investor outflow for the period between January and June 2019 stood at N257.8 billion compared to N214.9 billion in inflows over the same period.
“Domestic retail investor investment was N329.6 billion compared to N285 billion June 2019 year to date,” it added.
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited witnessed Santa Claus rally on Wednesday after it closed higher by 0.12 per cent.
Strong demand for Nigerian stocks lifted the All-Share Index (ASI) by 185.70 points during the pre-Christmas trading session to 153,539.83 points from 153,354.13 points.
In the same vein, the market capitalisation expanded at midweek by N118 billion to N97.890 trillion from the preceding day’s N97.772 trillion.
Investor sentiment on Customs Street remained bullish after closing with 36 appreciating equities and 22 depreciating equities, indicating a positive market breadth index.
Guinness Nigeria chalked up 9.98 per cent to trade at N318.60, Austin Laz improved by 9.97 per cent to N3.20, International Breweries expanded by 9.85 per cent to N14.50, Transcorp Hotels rose by 9.83 per cent to N170.90, and Aluminium Extrusion grew by 9.73 per cent to N16.35.
On the flip side, Legend Internet lost 9.26 per cent to close at N4.90, AXA Mansard shrank by 7.14 per cent to N13.00, Jaiz Bank declined by 5.45 per cent to N4.51, MTN Nigeria weakened by 5.21 per cent to N504.00, and NEM Insurance crashed by 4.74 per cent to N24.10.
Yesterday, a total of 1.8 billion shares valued at N30.1 billion exchanged hands in 19,372 deals versus the 677.4 billion shares worth N20.8 billion traded in 27,589 deals in the previous session, implying a slump in the number of deals by 29.78 per cent, and a surge in the trading volume and value by 165.72 per cent and 44.71 per cent apiece.
Abbey Mortgage Bank was the most active equity for the day after it sold 1.1 billion units worth N7.1 billion, Sterling Holdings traded 127.1 million units valued at N895.9 million, Custodian Investment exchanged 115.0 million units for N4.5 billion, First Holdco transacted 40.9 million units valued at N2.2 billion, and Access Holdings traded 38.2 million units worth N783.3 million.
By Adedapo Adesanya
Nigerian food and beverage company, Rite Foods Limited, has extended warm Yuletide greetings to Nigerians as families and communities worldwide come together to celebrate the Christmas season and usher in a new year filled with hope and renewed possibilities.
In a statement, Rite Foods encouraged consumers to savour these special occasions with its wide range of quality brands, including the 13 variants of Bigi Carbonated Soft Drinks, premium Bigi Table Water, Sosa Fruit Drink in its refreshing flavours, the Fearless Energy Drink, and its tasty sausage rolls — all produced in a world-class facility with modern technology and global best practices.
Speaking on the season, the Managing Director of Rite Foods Limited, Mr Seleem Adegunwa, said the company remains deeply committed to enriching the lives of consumers beyond refreshment. According to him, the Yuletide period underscores the values of generosity, unity, and gratitude, which resonate strongly with the company’s philosophy.
“Christmas is a season that reminds us of the importance of giving, togetherness, and gratitude. At Rite Foods, we are thankful for the continued trust of Nigerians in our brands. This season strengthens our resolve to consistently deliver quality products that bring joy to everyday moments while contributing positively to society,” Mr Adegunwa stated.
He noted that the company’s steady progress in brand acceptance, operational excellence, and responsible business practices reflects a culture of continuous improvement, innovation, and responsiveness to consumer needs. These efforts, he said, have further strengthened Rite Foods’ position as a proudly Nigerian brand with growing relevance and impact across the country.
Mr Adegunwa reaffirmed that Rite Foods will continue to invest in research and development, efficient production processes, and initiatives that support communities, while maintaining quality standards across its product portfolio.
“As the year comes to a close, Rite Foods Limited wishes Nigerians a joyful Christmas celebration and a prosperous New Year filled with peace, progress, and shared success.”
By Adedapo Adesanya
The Naira closed the pre-Christmas trading day positive after it gained N6.61 or 0.46 per cent against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Wednesday, December 24, trading at N1,443.38/$1 compared with the previous day’s N1,449.99/$1.
Equally, the Naira appreciated against the Pound Sterling in the same market segment by N1.30 to close at N1,949.57/£1 versus Tuesday’s closing price of N1,956.03/£1 and gained N2.94 on the Euro to finish at N1,701.31/€1 compared with the preceding day’s N1,707.65/€1.
At the parallel market, the local currency maintained stability against the greenback yesterday at N1,485/$1 and also traded flat at the GTBank forex counter at N1,465/$1.
Further support came as the Central Bank of Nigeria (CBN) funded international payments with additional $150 million sales to banks and authorised dealers at the official window.
This helped eased pressure on the local currency, reflecting a steep increase in imports. Market participants saw a sequence of exchange rate swings amidst limited FX inflows.
Last week, the apex bank led the pack in terms of FX supply into the market as total inflows fell by about 50 per cent week on week from $1.46 billion in the previous week.
Foreign portfolio investors’ inflows ranked behind exporters and the CBN supply, but there was support from non-bank corporate Dollar volume.
As for the cryptocurrency market, it witnessed a slight recovery as tokens struggled to attract either risk-on enthusiasm or defensive flows.
The inertia follows a sharp reversal earlier in the quarter. A heavy selloff in October pulled Bitcoin and other coins down from record levels, leaving BTC roughly down by 30 per cent since that period and on track for its weakest quarterly performance since the second quarter of 2022. But on Wednesday, its value went up by 0.9 per cent to $87,727.35.
Further, Ripple (XRP) appreciated by 1.7 per cent to $1.87, Cardano (ADA) expanded by 1.2 per cent to $0.3602, Dogecoin (DOGE) grew by 1.1 per cent to $0.1282, Litecoin (LTC) also increased by 1.1 per cent to $76.57, Solana (SOL) soared by 1.0 per cent to $122.31, Binance Coin (BNB) rose by 0.6 per cent to $842.37, and Ethereum (ETH) added 0.3 per cent to finish at $2,938.83, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
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