To address funding gaps for the over 40 million small businesses, the Securities and Exchange Commission (SEC) said it has signed a Memorandum of Understanding (MoU) with the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) to improve access to long-term financing for small and medium enterprises (SMEs) through the Nigerian capital market.

The partnership is designed to create alternative sources of capital for the country’s over 40 million registered micro, small, and medium enterprises (MSMEs). It aims to guarantee growth, create jobs, and contribute to the federal government’s $1 trillion economy target.

In a statement on Thursday, October 16, the SEC Director-General Emomotimi Agama stated that the initiative would open new funding routes for SMEs and integrate them into the capital market ecosystem. “Capital is the bedrock of any company. Today, we have about 40 million small and medium enterprises that are duly registered with the Small and Medium Enterprises Development Agency of Nigeria, and it is important that, as a capital market, we are able to find a route for these small and medium-scale enterprises to be able to raise capital for sustainability.

“We also want to bring them on board the pipeline of listed companies in Nigeria, where they will be able to democratise wealth and share a part of their institutions with Nigerians, making sure that development is faster and leads to the growth of the economy,” Agama stated. He added that the collaboration aligns with President Bola Tinubu’s agenda on employment, growth, development, and production, describing it as a critical step toward achieving the administration’s trillion-dollar economy vision. 

On his part, SMEDAN Director-General Charles Odii said the MoU would enable small businesses to overcome the high cost and scarcity of capital by leveraging the capital market. “Capital in this part of the world is very expensive and scarce. Through this collaboration, we are creating another source of financing for our medium-scale businesses. “We have set ourselves a target of at least 1,000 SMEs listing on the capital market. This will galvanise growth, create wealth, and reduce unemployment in Nigeria,” Odii said.

According to the SEC, the agreement seeks to deepen the integration of MSMEs into the formal financial system and help them meet regulatory and governance standards required for market participation. It will improve access to long-term financing by supporting qualifying MSMEs to raise funds through equity or debt securities under SEC regulations.

It will provide for capacity building to educate SMEs on capital market participation, financial literacy, and corporate governance. SEC added that it will facilitate debt market participation by guiding creditworthy SMEs to issue debt securities to qualified investors, thereby widening their financing options beyond traditional bank loans.

Credit: The PinnacleNg.