Photographer: George Osodi/Bloomberg
Capital market stakeholders have urged regulators to make the listing requirements for accessing the Alternative Securities Market (ASeM) less stringent to attract more small and medium enterprises (SMEs) participation on the platform, and grow the primary market segment of the Nigerian Stock Exchange (NSE).
The Alternative Securities Market is a specialised board for emerging businesses: small and mid-sized companies with high growth potential seeking to access the capital market.
According to the stakeholders, who spoke in an interview with The Guardian, if listing requirements are made more relaxed for SMEs, it would spur activities on the platform and the SMEs would eventually list on the Exchange.
The ASEM platform gives such companies the opportunity to raise long-term capital from the capital market at relatively low cost, allowing them to grow and institutionalise. Such companies need to meet the regulatory requirements of the NSE, the Corporate Affairs Commission (CAC), and the Securities and Exchange Commission (SEC), before they access the capital market for fresh capital.
Besides, the stakeholders also stressed the need for regulators to also intensify efforts on enlightenment and educating the SMEs operators on the necessity of being listed on the Stock Exchange.
They argued that SMEs are vital for economic growth and development in both industrialised and developing countries, by playing a key role in creating new jobs.
Regrettably, they noted that with the current state, financing the SMEs through the capital market is rather far below average in Nigeria, although the market offers an alternative long-term financing source.
According to 2016 market review, the NSE ASeM Index recorded marginal loss of 1.57 per cent from 1,208.65 Index points in 2015 to 1,189.69 in 2016 due to lack of patronage by investors, reflecting the depressive nature of the primary market, which serves as the SME’s window to the global investing community.
In April 2013, when the platform was inaugurated, ASEM listed the following companies, Adswitch Plc, Afrik Pharmaceuticals Plc, Anino International Plc, Capital Oil Plc, Juli Plc, McNichols Consolidated Plc, Rak Unity Petroleum Plc, Rokana Industries Plc, Smart Products Nigeria Plc, Union Venture & Petroleum Plc, and West Africa Aluminum Products Plc.
A stockbroker with Delloit Securities Limited, Tunde Oyediran, said making listing requirement less stringent for SMEs to access the ASEM window is the best way to attract more participation into the board.
“With this, and improved economic situation and effective marketing, many firms will avail themselves of this opportunity.”
An independent investor, Amaechi Egbo, said: “One of reasons why the more Scale Enterprises, SMEs are listed on the NSE is as a result of the stringent listing conditions and unfavourable business climate.
“Government should ensure that tax reduction is granted to these scale enterprises. Government should also provide affordable loans to the SMEs to make them improve on their businesses and make reasonable profit that can attract them to list.”
The President, Standard Shareholders Association, Godwin Anono, said: “In order to get more of these SMEs on board therefore, it is important to raise the level of awareness and sensitisation to the opportunities that the capital market offers.
“There is need for educating the SMEs operators on the necessity of being listed in the stock exchange. Also, it is important to review the associated costs and other requirements to improve access without jeopardising the interest of investors.”
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