The move affects instruments including treasury bills, corporate bonds, promissory notes and bills of exchange. Previously, these short-term bills were tax-exempt to encourage investor participation.<\/p>\n
<\/p>\n
Speaking to Channel Africa on Wednesday, Dennis O\u2019Shea, a Certified Financial Modelling and Valuation Analyst, said the directive is primarily aimed at revenue generation. \u201cThe government is taking advantage of the current economic cycle to broaden the tax base and increase non-oil revenue,\u201d he said.<\/p>\n
<\/p>\n
However, he warned that the move carries potential risks for domestic investors. \u201cIt\u2019s a double-edged sword. While it generates revenue for the government, it may deter investors seeking short-term returns before the next economic cycle in January,\u201d O\u2019Shea said. He added that reduced investment in short-term instruments could shift investor focus to longer-term opportunities, which may help mitigate some financial risks for the government.<\/p>\n
<\/p>\n
O\u2019Shea also questioned whether other strategies could have been explored. \u201cAfrican economies often lack long-term economic planning. Countries like China implement five-year economic plans, which provide foresight and stability. Nigeria could consider such models to balance short-term revenue needs with sustainable investment growth,\u201d he said.<\/p>\n
<\/p>\n
The directive highlights the government\u2019s intent to strengthen non-oil revenue sources, even as the country retains significant oil reserves that some analysts say could cover fiscal requirements. O\u2019Shea suggested that careful economic modelling and alternative revenue-generating strategies could help ensure the policy does not discourage investment while still meeting government objectives.<\/p>\n
<\/p>\n
–ChannelAfrica–<\/p>\n
<\/p>\n
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