By Chinenye Anuforo and Chinwendu Obienyi

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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 including Agriculture, Construction/Real Estate, Consumer Goods, Financial Services, Industrial Goods, Information &Communications Technology (ICT), Natural Resources, Oil and Gas, Services Utilities, and Conglomerates.
ASeM is designed to address issues and challenges associated with emerging businesses in Nigeria, namely 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.
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 (CBN) 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 ASeM as more investors and institutions signified interest in raising capital through ASeM platform.
However, recently there has been little or no activity going on in this sector of the market as investors shy away from stocks of companies listed on this segment. Statistics showed that as of June 30, 2016, ASeM currently had nine equities listed with a market capitalisation of N8,443,180,449. The 52-week change of the NSE ASeM index from July 2015 to June 2016 is only 0.01 per cent.
Further investigation by Daily Sun showed that despite regulatory efforts at reviving ASeM, companies listed on this segment of the market are yet to attract the needed liquidity from local and foreign investors.
Also in separate interviews with stakeholders in the market, they argued that the pressure and difficulties on the economy are reasons for low patronage of this segment of the market.
According to Ariyo Olushekun, former President, Chartered Institute of Stockbrokers (CIS), small companies, generally speaking, are not doing well owing to the economic situation. “There is no encouragement needed to grow small businesses. It is when we encourage them and they start making good profit that people will decide to buy their shares because investors buy shares based on companies’  performance.”
He suggested that to encourage SMEs that are not listed on the Exchange to get listed, the Federal Government needs to look at the issue of tax. “We need to give tax concessions to companies that are trying to list. If everybody is paying 30 per cent, they can pay 25 per cent. It will encourage more people to list and once they list, then we subject them to the basic rules (discipline) of the market and then they start paying tax and there will be no hiding place. But when they are not listed, they can neglect tax and it is difficult to find out.”
Doyen of stockbrokers, Alhaji Rasheed Yusuf Rasheed, in his own contribution explained that the economy is going through a very difficult period now. “It has been very tough for small scaled companies and they have been struggling to survive so it is the economic environment that is killing them. Most of these small scale companies you are talking about are either producing one thing or the other and even in the days of the old government, importation was a big competition for them when they were trying to produce their little drugs, cosmetics etc. Somebody else is importing them from China at a cheaper price therefore they cannot compete and that has been killing our SMEs. They don’t have enough protection against importation and they don’t have the capacity to compete with well established companies outside and since Nigeria likes imported items that has always been a problem for our small and medium scaled companies.”
Continuing, he said that what the investors look at before deciding on which company to invest in, is company fundamentals. “So, it would be difficult for one to invest his or her money where returns are uncertain.”
On what the regulators will do to salvage the situation, he said, “all of us talk about the regulator but no matter what you regulate, Nigerians themselves don’t put SME on top of their buying list. Everyone wants everything according to the standard obtained in London. The more we do that, the more our local companies suffer. We have to start patronising made in Nigeria goods, we have to start producing all our items in Nigeria and we have to be proud of whatever is being produced here but if all of us keep buying Italian made shoes and you are now asking why the small scaled man doing shoes in Aba is not making wealth, it is obvious for it is because nobody is buying the shoes he is making.”
Coroborating, Robert Omotunde, senior analyst at Afrinvest Securities Limited, also attributed the inactiveness of ASeM to the goings on in the economy.
He said: “You know that everything isn’t going so well at this point in time and the reason is because of so much pressure within the economy. Also, what the market is trading is the fundamentals of companies. Even on the main board where you have all the blue chip stocks, activity has been kind of modest because of the general lull in economic activity and you will not expect that the ASEM market will be buoyant when the main board is even hardly growing now.
“You can count the number of stocks that are trading actively even on the main board. So, if you can get securities at cheaper prices on the main board, why would you consider the alternative market?”
Continuing, Omotunde said before ASeM would experience some sort of boost in activities, the main market will be sort of buoyant. “The market should first of all cover the main market before investors start considering ASeM.”