By Chinenye Anuforo and Chinwe Obienyi

Micro, Small and Medium Enterprises (MSMEs) are important actors in economic growth and transformation.
Reports show that small and medium businesses contributed over 50 per cent to Nigeria’s Gross Domestic Product (GDP) in 2015. Although they play an important role in the economy, their access to finance is very limited and has even been a problem for policy makers globally, especially in Nigeria. MSMEs in Nigeria face a financing gap that restricts their economic prosperity.
There are an estimated 37,067,416 million MSMEs in Nigeria, out of which over 36,994,578 million are micro-enterprises, 68,168 are small and 4,670 are medium (SMEDAN 2013).
Growth in the MSME sector is directly linked with growth in the Nigerian economy and in the level of employment.
World Bank estimate identifies MSMEs lack of access to formal financing of their productive activities as a key constraint to business. 73.24 per cent of the topmost priority of assistance needed by MSME operators was access to finance (SMEDAN 2010).
As a result, many Nigerian MSMEs fund their activities through retained earnings as only a few large enterprises benefit from formal financial sector intermediation for their working capital or investment needs (IMF 2013). It is estimated that despite the fact that 80 per cent of MSMEs seek financing, only 5 per cent of enterprises have a loan.
But the capital market presents an opportunity for financing the MSME sector since it has always played a role in bringing together those with savings to invest and those who need capital thereby supporting economic growth.
The International Organisation of Securities Commissions (IOSCO), has emphasised the need for capital markets to support Small and Medium Enterprises (SMEs) in addressing this financing challenge by providing alternative funding sources.
Capital Market financing
According to the Chief Executive Officer of Cranes Securities Limited, Mr. Mike Ezeh, in order to address financing challenges facing small and medium sized businesses, capital market solutions are increasingly being adopted.
“Capital markets are clear alternative to bank lending and MSME funding could be sourced from the capital markets.”
However, raising capital by issuing equity or debt securities attracts high average transaction costs, arduous listing requirements and complex legal and regulatory frameworks. For these reasons, it has been mainly large firms that usually access the capital market.
SME-focused equity platform is a capital market solution available to well established SMEs offering an alternative to the main listing boards on national stock exchanges. The SME platform acts as a second-tier listing alternative and such platforms are characterised by lower listing requirements and costs to list than the main board. SME equity platforms are best suited to the largest SMEs such as the medium segment due to the initial cost and ongoing listing requirements most platforms demand.
According to IOSCO,  certain jurisdictions have implemented the SME platforms differentiating SME issuers from others in capital markets. Successful platforms across the world that have grown briskly and maintained a substantial number of listings include the Alternate Investment Market (London), TSX Venture (Canada), HK GEM (Hong Kong), Mothers (Japan), Alternext (Europe), AltX (South Africa) while we have the Alternative and securities market board (ASEM) in Nigeria
Nigerian Alternative Security Market (ASeM)
The Alternative Securities Market (ASeM) is a specialised board of the Nigerian Stock Exchange (NSE) for emerging enterprises with high growth potential. ASeM provides smaller companies the avenue to access the capital market and raise long-term finance through less stringent listing rules and requirements in line with regulatory requirements of the Corporate Affairs Commission (CAC) and the Securities and Exchange Commission (SEC).
Businesses could list in one of the 12 sectors on the NSE: Agriculture, Construction/Real Estate, Consumer Goods, Financial Services, Industrial Goods, Information & Communications Technology (ICT), Natural Resources, Oil & Gas, Services Utilities and Conglomerates.
ASeM is designed to address issues and challenges associated with emerging businesses in Nigeria, which include but are not limited to difficulty in accessing long term capital due to high cost of funds as a result of perceived high risk; increased cost of operations due to inadequate basic public infrastructure, including access roads, power, security, etc; inability to build capacity required to deliver results due to high staff turnover informal nature of operations, which undermines strategies, policies, processes and corporate governance and lack of proper accounting standards, controls and management of financial resources (NSE ND).
Small and medium sized companies with high growth potential are given the opportunity to raise long-term capital from the capital market at a relatively low cost, thereby enabling them to grow and institutionalise.
For instance, Omoluabi Savings and Loans Plc recapitalised to meet the Central Bank of Nigeria’s (CBN)’s capital base requirement for the primary mortgage institutions through ASeM in the twilight of 2013. This was the first straight equity Initial Public Offer (IPO) in the capital market since the recession of 2008. This gave impetus to the IPO market and the ASeM as more investors and institutions signified interest in raising capital through ASeM platform.
However, the Chief Executive Officer, Nigerian Stock Exchange (NSE), Oscar Onyema, stated that there are requirements needed to be satisfied before getting listed on the market, adding, however, that the benefits outweighed the cost of getting listed.
“Before getting listed on its board, a company must have satisfied pre-listing requirements, which include financial statements or business records for at least two years, pre-tax profits for two years, financial date of last audited accounts, which should not be more than nine months, the company must have at least 51 shareholders and minimum of 15 per cent share capital must be offered to the public and listing can be done through either IPO or introduction.”


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Diamond Bank partners EDC to boost entrepreneurial capacity

By Chinenye Anuforo

As part of its commitment to building and supporting economic growth and development in the country, Diamond Bank, in partnership with Pan-Atlantic University’s Enterprise Development Centre, EDC, has rolled out series of activities to celebrate the immense contributions of entrepreneurs in driving economic growth and development in the country.
The weeklong event, which kick-started with a ‘Walk for Entrepreneurship’ on Saturday, November 12, 2016 in Lagos, is seen by many in the MSME segment of the economy, not just only as a campaign to drum support for the enhancement of entrepreneurial skills in business, but also as a strategic move to highlight programmes that will help accelerate capacity development and boost productivity.
The Global Entrepreneurship Week is celebrated in over 160 countries across the world. And as part of the celebration in Nigeria, the Entrepreneurship Walk will also hold simultaneously across other five major cities including Ibadan, Enugu, Port Harcourt, Nsukka and Abuja.
Chioma Afe, Head, Corporate Communications, Diamond Bank, stated that despite the enormous challenges confronting Nigerian entrepreneurs, their contribution in economic growth and development, especially in the MSME space is undeniable.
According to her, Diamond Bank is very passionate about these operators in the economy, noting that in this partnership with EDC “we want to let them know that we treasure and value their roles”.
A statement on the Global Entrepreneurship Week, GEW, affirm that the initiative celebrates the contribution and passion of entrepreneurs that bring ideas to life, drive economic growth and contribute significantly to expand human welfare.
“Diamond Bank is at the forefront of promoting entrepreneurship in Nigeria. We are aware that entrepreneurs drive the economy especially at the MSME level. What we are doing with EDC is not just only to celebrate them, but, also, to galvanise them to do more and accelerate economic recovery and stability,” Afe stated.
Speaking further, she pointed that the programmes line-up by the Bank for the week will give entrepreneurs the much needed opportunity for business networking and connectivity.
Topics scheduled for discussion throughout the week in Inspiration FM include, ‘How to be a successful start-up’, ‘Harnessing the Creative Industry’, ‘Exporting Nigerian SMEs’, ‘Revisiting the 3Rs in HR Management’, ‘Innovative ways of Raising Capital’, ‘Social Innovation for growth’ and ‘Celebrating Entrepreneurship’.
The weeklong series of activities will climax with entrepreneurs’ forum on November 17, 2016 in Abuja.

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Recession: NIPOST diversifies into furniture manufacturing

Contrary to the belief that the Nigeria Postal Service (NIPOST) has become irrelevant, the organisation said it is embracing new ideas and innovation to drive its services in line with modern trends and challenges .
Speaking with journalists at the Lagos International Trade Fair at the weekend, NIPOSTís General Manager, Public Relations, Lawal Simbiat Onize, said that the organization has tapped into the growth of e-commerce in the country to help Nigerians deliver parcels and products across the globe.
She said: “We are linked with 192 postal services across the world. We also run logistics and help to deliver parcels and goods in and out of the country. You want to transfer money to the rural area, go to any General Post Office and make use of our Post Cash.
She explained that NIPOST has a workshop manufacturing different products such as kitchen utensils, furniture, and tankers, to boost local content and is partnering with educational institutions and banks to utilise its property all over the country.
“Recently we just spoke with JAMB, we will flood our locations with internet service and computers so that they can be used for their computer-based exams at an affordable price, especially for those in the rural areas. We are looking forward to working with banks such that we can bring banking to the unbanked as part of our financial inclusion project. People can come to deposit money at NIPOST even though a bank is not available at a particular place.”
Also speaking, Area Postal Manager, Lagos Island territory (NIPOST), Mr. Umaru Kaboji, said the organisation has been repositioned to key into transformation agenda of the Buhari-led government.
According to him, many small-scale businesses are taking advantage of NIPOST’s competitive rates to deliver goods to their customers all over the world.
He added that the organization has been automated with the latest ICT facilities which allow customers to receive and transfer money easily to any part of the country.