Dipo Olowookere
By Dipo Olowookere
On Thursday, April 29, 2021, from 10:00 am – 11.30 am, players in the Small and Medium-sized Enterprises (SMEs) will be tutored on how to raise funds through the stock exchange.
The event is being put together by the Nigerian Exchange (NGX) Limited and will have experts in the SMEs and stock market sectors of the economy in attendance.
Business Post gathered that the primary objective of the webinar is to educate SME owners on the alternative funding opportunities available in the capital market to finance business growth and to showcase the opportunities available through the Nigerian Exchange Limited.
According to the exchange, other objectives of the online seminar will include facilitating engagements with prospective companies for listings, creating greater visibility for the NSE’s products and services, and exposing the opportunities available in the stock market to retail investors.
The theme of the event Capital Raising for SMEs through the Stock Exchange and was chosen by the NGX in recognition of the challenges faced by small business owners to source funds.
It is widely accepted that in the African continent, SMEs employ about 80 per cent of the continent’s workforce and play a significant role in the region’s economic development.
However, access to sustainable finance has been singled out as a critical constraint to the growth and development of SMEs.
Additionally, SMEs are noted to face greater financing obstacles than larger firms and are associated with higher transactions costs and risk premiums.
An entrepreneurship and business management expert, Dr Timi Olubiyi, had in an article in November 2020 said SMEs owners can use the stock market to solve their financing needs over the long term as it can bring together those with savings to invest and those who need capital, thereby supporting economic growth.
“The stock exchange can be the most appropriate form of acquiring long-term financing for structured SMEs and the cost of equity capital can be lower than other forms of finance particularly bank loans.
“The stock market’s capital allocation role, which means that the exchange provides channels for financial intermediation between investors and issuer (listed companies), which creates an opportunity for SMEs.
“Businesses do not need to be a conglomerate or multinational to be listed on the stock exchange. In fact, there are trading platforms tailored to the needs and capabilities of SMEs.
“Many countries in the world allow SMEs to raise funds from the capital market and have SME platforms such as the Alternative Investment Market in the UK for instance.
“In Africa, SME board also exist on some exchanges on the continent; namely Botswana (BSE); Casablanca, Morocco (CSE); Douala, Cameroon (DSX); Egypt (ESX); Johannesburg, South Africa (JSE); Nairobi, Kenya (NSE); Lusaka, Zambia (LuSE); Mauritius (SEM); Mozambique (BVM); Alternative Securities Market (ASeM) (recently remodelled to become Growth Board) in Nigeria (NSE); Seychelles (Trop-X) and Swaziland (SSX) amongst others,” he had said.
