Feature/OPED
Raising Capital: Why the Stock Exchange May be Good Choice for SMEs
By Timi Olubiyi, PhD
According to the World Bank, formal Small and Medium Enterprises (SMEs) contribute up to 60 per cent of total employment, and up to 40 per cent of national income (GDP) in emerging economies.
A common outcome of research and discussions on SMEs is that this form of business plays a crucial role in promoting economic development, especially on the African continent where SMEs have remained critical contributors to employment and economic activities.
However, these SMEs face a financing gap and the challenge of access to capital, which restricts their economic prosperity.
From context observation, these SMEs largely ponder with questions such as “should we take a bank loan, or should we consider other alternatives for funding and credits?”
If this sort of thought applies to you, then this piece is for you, take out time to read through.
Furthermore, for those that are not aware of the benefits listing on the stock exchange portends, this piece will be of use as well.
World over, SME operators primarily depend on bank loans or government schemes for financing. More so, SMEs have a heavy dependence on debt rather than equity in their business operations. Therefore, the need to bring awareness to the diversification of funding sources is necessary.
The capital market is critical to a country’s economic development and a distinct alternative to traditional bank lending and financing. If accessed, it can provide a cost-effective medium- to long-term finance for SMEs including large corporations and multinationals.
Though many non-bank financing alternatives such as financial leasing, private equity (including angel investing and venture capital), and crowd-funding are all other forms of financing which businesses may use at various stages of their life cycle, however they are not as easily accessible as the stock market.
Importantly, SME listing on stock exchanges will add significantly to the creation and distribution of wealth in any economy. However, firms may list on a stock exchange for a variety of financial and non-financial reasons.
Evidently, the recent crisis with the novel coronavirus pandemic and the looming recession has revealed that bank financing is not a reliable source of long-term financing.
Agreeably, long-term financing is an essential element for supporting investment and growth at this time, for any business. Hence, the stock market is the best way to have access to a meaningful impact.
Bank loans might either be too expensive or not even an option for most SMEs at this time because of bank stringent measures which often require assets to back the loans.
Access to long-term financing enables SMEs to solve their financing needs over the long term and this has a positive effect on economic growth and employment generation.
The stock market can provide this and have always played a role in bringing 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.
One key difference on these platforms is the requirements for listing which vary across the exchanges. Significantly, listing requirements for SME boards are usually more relaxed compared to the main trading boards, this is done with the aim of cutting barriers and encouraging SMEs to list.
The SME board is a segment of the stock exchange, dedicated to trading the shares/securities of SMEs, who otherwise find it difficult to get listed on the main board of the exchange due to stringent listing requirements.
In Nigeria, the Alternative Securities Market (ASeM) trading platform helps small and growing companies to raise funds and it is different from the premium and main platform of the stock exchange. The platform is strictly for SMEs and the platform is characterized by lower attractive listing requirements and reduced listing costs than the mainboard. Simply put, it can be adjudged a second-tier listing alternative which provides the opportunity for SMEs to raise long-term capital at relatively low cost from the capital market.
Businesses can raise funds directly on the stock market when they list. In Nigeria, for instance, there are no limits to the amount of capital companies can raise on ASeM trading platform of the Nigerian Stock Exchange, as long as it is in line with other regulatory requirements, such as those of the Corporate Affairs Commission (CAC) and the Securities and Exchange Commission (SEC).
Whether or not they raise funds upon listing, listed firms may also be able to tap other sources of finance more easily than similar, unlisted firms.
This is because the process of listing requires firms to meet strict financial reporting and corporate governance requirements. Therefore, meeting these standards improve accounting practices and financial management, thereby increasing firms’ transparency and potentially improving their creditworthiness out there.
It is important to state that a Stock Exchange listing offers the following benefits to SMEs: firstly, it will provide a clear price for the shares and a valuation of the business once listed, it gives businesses access to a wider potential investor base and access to long term capital for growth and expansion. Recall, one of the most important reasons firms list is to increase their access to finance.
Moreover, listing does encourage good corporate governance culture from the listed companies. It can also raise the company’s public profile with customers, suppliers, investors, financial institutions and it can majorly help SMEs with international business conducts, particularly with the company perception and prestige. Like all businesses, SMEs need capital to start up and keep going until they become profitable, once listed SMEs can have access to fundraising as required.
In order to make listings more attractive, however, government, regulators, and policymakers should consider policy responses to encourage more listing, further lowering listing requirements to encourage more participation in the capital market.
Furthermore, regulators can reduce transaction and listing costs so that more SMEs will be attracted to the market and make the space wider.
Also, to deepen market participation, it is recommended that government agencies, which regulate the market, should organize promotional campaigns, public seminars, and conferences to increasing public awareness and to address potential drawbacks of SMEs from listing.
The point of note is that to improve the responsiveness of SMEs to listing and its ample benefits, government intervention is necessary. Therefore, the post-COVID-19 regulatory regime should involve consistent and coordinated policy responses and pronouncement to assist and encourage SMEs to list on the stock exchange, this will, in turn, improve foreign market participation, boost the economy, and also advance market confidence.
SMEs can only grow and contribute positively to economic growth and development if they are well supported by Government and regulatory institutions.
Therefore, attention should be given to this significant sector of the economy that is increasingly faced with the problem of high cost of production, lack of access to funding and threat to business survival. More businesses will strive and more jobs will be created with policies and regulations that can drive and aid access to capital and SME growth in the country.
Globally, SME’s are substantially the major employer of labour, an avenue for wealth creation, and sustainable economic development. Therefore, for many businesses seeking funding to remain viable is crucial, consequently, an alternative source of funding can be accessed through listing on the Stock Exchange, even though is likely to be a long-term objective.
It should be seriously considered as part of the company’s strategy post-COVID-19, particularly as it relates to business funding and credits. More so the survival of small and medium-scale enterprises with access to capital is key at this time.
It is very convenient to list on the stock exchange but many SMEs have difficulty in arranging the listing requirements, meet legal and regulatory frameworks, and so on.
Getting or finding advisors to prepare these requirements for listing on an exchange might just be reasonable. If you are concerned or interested in benefits listing on the stock exchange can provide, you may need to urgently reach out to a professional for essential advice. Good luck!
How may you obtain advice or further information on the article?
Dr Timi Olubiyi is an Entrepreneurship and Business Management expert with a PhD in Business Administration from Babcock University Nigeria. He is a prolific investment coach, seasoned scholar, Chartered Member of the Chartered Institute for Securities & Investment (CISI), and Securities and Exchange Commission (SEC) registered capital market operator. He can be reached on the Twitter handle @drtimiolubiyi and via email: drtimiolubiyi@gmail.com, for any questions, reactions, and comments.
By Ahmad Dambazau
The National Assembly is a constitutional locomotive for any purposeful democratic government, it provides checks to the government of the day and a legal basis for the system in general .This basically accounts for the high respect usually accorded and, of course, the attendant high expectation placed on it. The legislative arm of government like any other is saddled with the responsibility enshrined in the constitution and among such major functions includes representation, oversight and law making in addition to many other numerous functions.
Be that as it may, it has been a genuine cause for worry for Nigerians that, despite our series of experimentation with democracy, our legislators have performed below expectation. Their handling of national issues has especially remained without constitutional decorum and political experience required of people of their exalted status. Part 2, Section 4 of the 1999 Constitution, as amended, vests the legislative powers of the federation on the National Assembly which comprises the Senate and House of Representatives.
Dawakin Tofa ,Tofa and Rimin Gado Federal constituency is one of the few constituencies in Nigeria represented by the same legislator for 18 years(2007-2005) despite poor representation .
As the federal constituency searches for the best man to represent them for this serious legislative task. One name keeping ringing bell is Hon Sunusi Bature Dawakin Tofa ,Media and Communication Expert and Director General of Media and Publicity to Kano State Governor.Sunusi has earlier served as the Chief Press Seceretary to the Governor in the early days of the administration .
Mallam Sunusi is a seasoned PR guru, development communication and stakeholder engagement expert with 21 years working experience in both international development, private sector and the Media in Nigeria.
He is a winner of the Cambridge education award on investigative journalism in 2008, Bature has worked at different capacities in various national, International and Bilateral organizations such as the British Foreign and Commonwealth Development Office (FCDO), the United State Agency for Internal Development (USAID), Bill and Melinda Gates Foundation, Save the Children International, Discovery Learning Alliance and the Rockefeller Foundation.
He held several positions which include General Manager Corporate Services at Dantata Foods and Allied Products Limited (DFAP), Director Stakeholder Engagement at YieldWise Project, Country Program Manager at Girl Rising (ENGAGE) Project funded by the US Government, State Project Coordinator for MNCH Campaign Project of the BMGF, Deputy Director Operations at Discovery Learning Alliance, State Program Officer, Policy Advocacy and Media Development, Communication and Knowledge Management Specialist among other positions.
Graduated with a Bachelor’s degree (B.A. Hons.) in Mass Communication from University of Maiduguri, Sanusi holds a National Diploma in Mass communication from Kaduna Polytechnic, a Higher National Diploma (HND) and a Postgraduate Diploma in Public Health Education and Promotion.He also bagged MSc. in Social Work with specialization in Community Development from Ladoke Akintola University of Technology, (LAUTECH) Ogbomosho, Oyo State and another master’s degree in Public Relations (MPR) from the prestigious Bayero University, Kano, Nigeria. He participated in the MSc program on Project Management at Robert Kennedy College, Zurich, Switzerland.Until his appointment, Sunusi Bature served as the Vice President, Nigeria operations for a UK based firm, Kingston Organic PLC.
Hon Dawakin Tofa has opened yet another vista of debate among electorates on the value of quality representation with vigour,expertise and experience of having a wider constituency responsibility and coverage .He has vindicated his mettle among his constituents that even as an appointee of the Governor his eloquent consistent and fearless voice always seeking the improvement of lives of his constituents accountability among representatives of the people.
He is truly a representative of the people though unelected going by the amount of work he was able to do for the overall benefit of his people. In fact, it is worth elucidating that this PR guru was able to touch the lives of the people in his stewardship in the private and public sectors. So far he has proved to be one of the few politicians that attracts government presence to his community. No matter what anyone would say, the amount of dividends of democracy that this community leader was able to bring to the door step of the people is unmatched.
Sunusi Bature’s development credentials and landmarks speaks volumes. The highlights of which were stellar achievements of re-positioning the educational sector in the more definitive ,radically ,progressive and futuristic manner , not to mention the capacity building, empowerment and educational scholarship for his people ,all shone brightly for both his admirers and detractors to access.
The Director General of Media and Publicity to the Governor of Kano State, Sunusi Bature Dawakin Tofa, has been honoured with the prestigious Most Outstanding Spokesperson Award by the Nigeria Institute of Public Relations (NIPR) in collaboration with the Federal Ministry of Information. Dawakin Tofa was selected for this esteemed award in recognition of his instrumental role in promoting not only the positive image of the Kano State Governor and his giant strides also for effectively showcasing the only NNPP ruling state in Nigeria.
In the award citation, Mallam Sunusi was hailed as an unwavering proponent of non-violent communication, renowned for his extensive network and adept delivery of practices with clarity in objectives, and strategic framing of engagements with his audience.His profound impact and effectiveness in perception and reputation management are highly commendable.
In whatever one indulges in there are always people to observe and give their verdict .It is a well- known fact that there is nothing stronger than the people’s verdict.it shows a collective desire which inevitably is the voice of reason. The momentum of Hon Sunusi Bature Dawakin Tofa legislative bid is gathering amongst all strata of the constituency is enough testimony that experienced count in the race for the parliamentary seat.
Dambazau wrote in from Kano
Over the past two years, Nigeria has implemented key policies and reforms to revitalize its mining industry, attract investment and strengthen the sector’s contribution to GDP.
Recent government-led initiatives have streamlined licensing processes, removed bottlenecks and simplified market entry for international investors, enhancing production across the country’s 44 solid mineral types.
As Africa’s premier mining investment event, African Mining Week (AMW) 2025 will convene Nigerian and African stakeholders with global investors and industry leaders to drive deal-making and accelerate sector growth.
Launch of Mineral Resources Decision Support System
In May 2024, the Nigerian Geological Survey Agency unveiled the Mineral Resources Decision Support System to provide global investors with easy access to geological and policy data.
The platform markets Nigeria’s vast mineral resources and critical infrastructure, assisting investors in making informed decisions about the country’s mining sector. By enhancing data transparency and accessibility, the system aims to streamline investment processes and boost investor confidence in Nigeria’s mining industry.
Restructuring of Ministry
To improve efficiency, Nigeria restructured the Ministry of Mines and Steel Development in August 2023, creating two separate entities. The Ministry of Solid Minerals Development focuses on upstream activities and investment facilitation, while the Ministry of Steel Development oversees the development of steel and metallic resources to drive industrial growth. This restructuring aims to enhance sector-specific governance, attract targeted investments and accelerate the country’s mineral and steel value chain development.
Approval of Nigerian Minerals & Mining Bill
Approved in April 2023 and currently under public review, the Nigerian Minerals & Mining Bill aims to introduce incentives for foreign investors while strengthening local content requirements. Once enacted, it will become the sector’s primary legal framework, enhancing transparency and investor confidence.
The bill is also expected to modernize regulatory oversight, ensuring sustainable resource management and aligning Nigeria’s mining sector with global best practices.
Implementation of Nigeria Mineral Value Chain Regulations
Implemented in July 2021, the Nigeria Mineral Value Chain Regulations mandates local processing of raw minerals such as gold and lithium, encouraging downstream investment.
Following this policy, China’s Avatar Energy Materials Company launched a 4,000-ton-per-annum lithium processing facility in Nasarawa State in May 2024, while Ming Xin Mineral Separation Nig Ltd. is developing a lithium processing plant in Kaduna State to support EV e battery production.
These investments mark a significant step toward positioning Nigeria as a key player in the global critical minerals supply chain. Against this backdrop, AMW 2025 will provide a platform for industry leaders to explore Nigeria’s evolving mining landscape and engage with global investors.
Abba Dukawa
Despite the position of the Court of Appeal in the case of the Speaker of Bauchi State House of Assembly Vs Hon Rifkatu Samson Danna (2017) 49 W.R.N that a lawmaker is a representative of his people whose membership of the House is guaranteed by the Constitution and not by any other person or persons, the Senate and its leadership have continued to use suspension as an instrument to oppress, intimidate and whip lawmakers into line.
Sadly, the National Assembly has continued to ignore the position of the courts on suspension of lawmakers as the Senate Committee on Ethics, Privileges and Public Petitions recommended a six-month suspension for the lawmaker representing Kogi Central Senatorial District, Senator Natasha Akpoti-Uduaghan, over her dispute with the Senate President, Senator Godswill Akpabio, following her alleged violation of the Senate’s rules.
A few hours after the committee submitted its report, the Senate quickly adopted the recommendations and slammed a six-month suspension on the lawmaker, depriving her senatorial zone representation in the Red Chamber, in violation of the Constitution, which guarantees that each of the 109 senatorial districts in the country shall be represented in the upper legislative chamber.
Her suspension for six months has raised legal issues as it is also in breach of various court judgments in the previous cases involving Senators Ali Ndume and Ovie Omo-Agege, as well as Dino Melaye and 10 other members of the House of Representatives, as well as Bauchi and Ondo states’ lawmakers.
When the Senate on March 30, 2017, suspended Senator Ndume for 90 legislative days for not “conducting due diligence” before filing a petition against the then Senate President, Dr Bukola Saraki, Justice Babatunde Quadri of the Federal High Court in Abuja nullified his suspension, declaring the action illegal, unlawful and unconstitutional. Delivering judgment in the suit marked FHC/ABJ/CS/551/2017, which Ndume filed, the judge said the suspension was in violation of Sections 68 and 69 of the Constitution of the Federal Republic of Nigeria, 1999 (as amended) and Article 13(1) of the African Charter on Human and Peoples’ Rights (Ratification and Enforcement) Act CAP A9 Laws of the Federation of Nigeria, 2004.
The judge consequently ordered the Senate to pay the plaintiff his outstanding salaries and allowances. Again, Justice Nnamdi Dimgba of the Federal High Court in Abuja nullified the suspension, saying that while the National Assembly has the power to discipline its erring members, a legislator could not be suspended for more than 14 days.
A recent scandal involving Senator Natasha Akpoti-Uduaghan and Senate President Godswill Akpabio has raised questions about the integrity of Nigeria’s National Assembly. The controversy began when Akpoti-Uduaghan accused Akpabio of sexual harassment during an interview with Arise Television, alleging that he made inappropriate advances towards her at his residence in Uyo, Akwa Ibom State, in December.
Between February 28 and March 5, several senators publicly defended Senate President Godswill Akpabio, dismissing Senator Natasha Akpoti-Uduaghan’s allegations of sexual harassment. Senator Neda Imasuen, Chairman of the Senate Committee on Ethics, Privileges, and Public Petitions, was among those who defended Akpabio.
Undeterred, Akpoti-Uduaghan formalized her accusations by submitting a petition to the Senate on March 5, urging her colleagues to investigate her claims. However, the Senate swiftly dismissed the petition, citing a rule that prohibits senators from submitting petitions signed by them. Chairman Imasuen declared the petition “dead on arrival,” referencing Order 40, Subsection 4 of the Senate Standing Orders. The next day, the Senate voted to suspend Akpoti-Uduaghan for six months, citing misconduct and actions that allegedly brought the institution into disrepute. Akpoti-Uduaghan has rejected the Senate’s decision, vowing to continue representing her constituents.
In a statement, she condemned the move, saying: “Against the culture of silence, intimidation, and victim-shaming, my unjust suspension invalidates the principles of natural justice, fairness, and equity.” Akpoti-Uduaghan emphasized that her suspension does not withdraw her legitimacy as a senator and that she will continue to serve her constituents and the country until 2027 and beyond.
Former Senate President Bukola Saraki has called for a transparent investigation into the matter, emphasizing the need to safeguard the Senate’s integrity. However, the Senate’s decision to suspend Akpoti-Uduaghan for six months without investigating her allegations has sparked widespread criticism.
The Nigerian Bar Association Women Forum (NBAWF) Chairperson, Barrister Huwaila Ibrahim, has urged Senate President Godswill Akpabio and Senator Natasha Akpoti-Uduaghan, Chairman of the Senate Committee on Diaspora, to undergo a transparent and open investigation into allegations of misconduct involving both parties.
According to Ibrahim, an investigation would allow Senator Akpabio to clear his name and Senator Akpoti-Uduaghan to substantiate her claims.
Additionally, Ambassador Zainab Mohammed, spokesperson for the Coalition of Women in Governance (CWIG), has called for Senator Akpoti-Uduaghan’s recall following her six-month suspension, citing concerns that the suspension constitutes an assault on democracy and a betrayal of collective values
After she dropped the bomb, a flurry of activities ensued. Senator Ireti Kingibe, a serving female senator, and two former female senators, Senator Abiodun Olujimi and Senator Florence Ita-Giwa, were invited to share their views. However, their submissions were met with widespread disappointment. While arguing for adherence to rules is valid, it’s essential to recognize that rules should be applied fairly and without bias, especially in institutions of great importance.
It was clear that Senator Natasha felt beleaguered, believing the Senate President had a score to settle with her. If this was the case, I expected the three senators to support a process that would allow Senator Natasha to shed light on her serious allegations of sexual harassment, beyond national television, and for the Senate President to defend himself transparently.
To people’s horror, none of the female senators stood up for another woman. Even if they thought Senator Natasha was misguided, she was still entitled to have her fears and concerns heard. It’s painful that they missed the opportunity to address the constant intimidation, gas-lighting, and belittling women in leadership positions face.
To women who have publicly opposed Senator Natasha, there is news for you: you’re not fighting the same battle as most male senators or men who have aired their views. You’re not on the same page; you’re not even reading the same book.
If this was just about Senator Natasha following rules and not disrupting the space for women in politics, the problem could be easily fixed. Familiarizing herself with Senate rules and proceedings would make her work more productive.
However, this is not what’s at play. What’s happening is a full-scale war on women in public life, with clear lines drawn. Women need to wake up! We need to battle powerful forces that want women to remain silent in the face of provocation and abuse.
People don’t have to like Senator Natasha Uduaghan, but she deserves respect, to be heard, and allowed justice. The silence of feminist organizations and women’s rights advocates is deafening. The controversy has ignited a national debate, with many Nigerians demanding a thorough investigation into the allegations and an end to the culture of silence and intimidation.
Abba Dukawa writes from Kano can be reached via abbahydukawa@gmail.com
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