Why multinational companies avoid listing on NSE- Experts

Federal government interference in private businesses is said to be one of the reasons why multinational companies are refusing to list their shares on the floor of the Nigerian Stock Exchange, National Daily has gathered.

Efforts by the Nigerian Stock Exchange (NSE), to woo multinational companies in the telecoms, and oil and gas sectors to list on the nation’s bourse may continue to ‘hit a brick wall’, unless government withdrew completely from private business.

Capital market stakeholders, who spoke on the dearth of Initial Public Offering (IPO) in the stock market, argued that aside withdrawing from business, government must introduce fiscal and monetary policies that would stimulate private sector investment.

According to them, a deliberate policy on incentive would attract more multinational firms’ in the telecoms, and oil and gas to float IPOs, which would ultimately resuscitate the primary market segment, improve the current illiquidity position, and deepen the market.

Commenting, the Managing Director, Seplat Petroleum Development Plc, Austine Avuru, explained that there is need for government to come up with fiscal incentives in the areas of taxation, custom tariff structure, and robust credit facilities.

Avuru said: “All that government needs to do is to stimulate the growth of the private sector, and they can only do so by withdrawing themselves completely from private business, and come up with both fiscal and monetary policies that will stimulate the private sector.

An economist, Johnson Chukwu, in a telephone interview, said the current ownership structure of International Oil Companies (IOCs) would not allow them to list on the Exchange.

According to him, a framework that would enable IOCs to operate as a fully incorporated business with operational assets in Nigeria must be established.

Chukwu, who is also the Chief Executive Officer, Cowry Asset Management Limited, explained that government must create appropriate policies to encourage multinationals, which may not have compelling need to raise capital within the local environment to list on the bourse.

“The IOCs are not operating in Nigeria, but under incorporated joint venture arrangement. They do not own assets in Nigeria. We need to have IOCs operate their assets in Nigeria under a framework that makes for incorporation and fully incorporated businesses.

“Multinationals that have good financial position can access fund outside the country, they may not have compelling need to so in Nigeria. Therefore, Government can woo them with appropriate regulation in terms of tax incentive such as discriminatory withholding tax law that will impose lower withholding tax on dividend paid by listed firms.”

The Publicity Secretary, Independence Shareholders Association of Nigeria, Moses Igbrude, argued that there is no incentive in the market presently that would attract these multinationals to list in the market.

“Listing on the capital market means losing ownership, to allow investors to be members of the company; and such decision will be based on the perceived benefits that will accrue to the initial owners,” he said.