BY BUKOLA IDOWU
Stakeholders in the capital market have identified the Nigerian capital market as the best platform for long-term capital for startups and Small and Medium Enterprises (SMEs).
They gave the submission at a webinar hosted by the Nigerian Exchange (NGX) Ltd. on “Capital Raising for SMEs through the Stock Exchange” on Thursday in Lagos.
According to them, the capital market provides the best avenue for the SMEs to access long-term capital at a reduced rate when compared with borrowings from the bank.
President, South-East Chamber of Commerce, Industry, Mines and Agriculture, Mr Humphrey Ngonadi, said during his keynote address that enlightenment on access to finance was crucial for private sector growth.
Ngonadi explained, “The significance of the SMEs for growth and competitiveness of the economy is universally recognised.
“It has been our experience in the chamber of commerce that SMEs face a wide range of challenges that impact their potential which includes financial mismanagement, poor record keeping, poor state of infrastructure, multiplicity of taxes, among others.
“Events such as these which target enlightenment on accessing finance is crucial to promote private sector solutions like the Nigerian Exchange Growth Board which raises long-term capital and promotes liquidity for SMEs.”
Divisional head, Business Listing, NGX, Mr Olumide Bolumole, said that the webinar was in furtherance of educating business promoters on the alternative funding opportunities of the capital market to catalyse business growth.
Bolumole said, “The SMEs outnumber large companies and employ vast number of people. According to the NBS, SMEs contributed about 48 per cent of the national Gross Domestic Product in the last five years with a total of about 41.5 million enterprises nationally.
“Of these, the south-south and south-east regions possess 33 per cent of SMEs across all sectors of the economy.
“This segment also accounts for 96 per cent of operational businesses and 84 per cent of employment, despite all these, the economic landscape among other challenges are daunting.
“They include multiplicity of taxes, levies and fees, lack of right-sized and right-priced financing, unavailability of needed corporate governance to maximise capacity utilisation and profitability for the companies.”
Bolumole said that the COVID-19 pandemic, high inflation rate and naira devaluation had negatively impacted businesses.
He, however, said that irrespective of the challenges, there was a need for SMEs to upscale from medium to long-term capital.
According to him, the NGX has various products and services to support capital raising of corporates.
President, Association of Capital Market Academics of Nigeria, Prof. Uche Uwaleke, said a recent study on the capital market awareness ratio, showed that the south-south, south-east and north-east region had the least of capital market literacy.
Director-general, Bonny Chamber of Commerce, Industry, Mines and Agriculture,Mrs Constance Nwokejiobi, harped on the need for capacity building put together by the exchange in collaboration with the chambers of commerce to promote awareness across the south-south and south-east regions.