Equity investment has two types of attractions. The first is protection
against inflation. Secondly ordinary shares has been and probably winremain the most favourable means of maintaining the value of money against the background of the inflationary spiral. The reason is that ordinary shares reflect the increasing earnings of industries; earnings which have been boosted not only by greater effort and expansion by those industries but also to a considerable extent by inflation.
Investment Climate
Investment climate in Nigeria refers to all those things that help to motivate industrialists and others with money to invest. Industrialdevelopment in Nigeria has not been encouraging. Proposed expansion programmes by some companies are prunned down or in some cases suspended. A number of factors affect the investment climate of a country. These are:
(a) Government policies.
(b) Availability of accurate data and information for sound decision
making
(c) Availability of infrastructural facilities e.g. good road, network,
communications telephones, postal systems, power supply etc.
Attitude of Federal and State Governments to Investments
By the attitude of government to investment, is meant the policies
designed to stimulate the growth of investment and if possible appraise
whether such policies have positively enhanced the growth of investment over time or retarded it. It is relevant at this stage to mention that governments generally mean well in drawing their policies but the execution of these policies generally leave much to be desired.
The third and fourth national development plans revealed government's determined efforts to raise and improve the standard of living of the people of Nigeria. The earning has been divided into productive and non- productive sectors. The Federal Government had made massive invest-ments within the last five years in agriculture, manufacturing, housing, construction, petrol-chemical industries and steel projects. The purpose of these is mainly to make Nigeria self-sufficient in basic food supply, provide job opportunities and reduce the country's dependence on import of some raw materials for industry. Some fiscal incentives are
These are:
(a) Income Tax Relief for pioneer industries
(b) Duty free importation of farm machinery
(c) Investment allowance (currently 10%)
provided for investors wishing to go into the large scale agricultural
(d) Provision of carrying of losses forward in tax computations
The Central Bank credit guidelines to commercial and merchant banks reflect this. The preferred sector of the economy has been allocated 75% of total bank lending.