SEC Plans To Launch Capital Formation Office For MSMEs

In a bid to address the financing challenges faced by micro, small, and medium enterprises (MSMEs) in Nigeria, the Securities and Exchange Commission (SEC) has announced its progress toward establishing a dedicated office for small business capital formation.

This office, which is at an advanced planning stage, will provide tailored support to companies seeking to raise capital through smaller offerings, helping them thrive within Nigeria’s capital markets.

The Director-General (DG) of the SEC, Dr. Emomotimi Agama, shared these updates in his Goodwill Message at the 2024 National MSME Conference themed: ‘GROW Nigerian: Sustaining a Digital and Innovation-Driven Economy.’

Represented by Executive Commissioner for Corporate Services, Mrs. Samiya Hassan Usman, Dr. Agama emphasised the office’s role in enabling MSMEs to leverage the capital markets to expand, access scalable financing, and contribute to Nigeria’s economic growth.

“MSMEs are the backbone of our economic growth. Fostering their development is essential for driving innovation and building an enterprise-driven economy. The SEC remains committed to fostering a conducive environment that helps MSMEs access capital, scale their businesses, and utilize financial technology to power their growth,” Dr Agama said.

This new office will provide education and outreach to small businesses and their investors, supporting capital formation and market development. Dr. Agama emphasised that the capital markets can deliver patient, long-term capital to enable MSMEs to innovate and expand globally, with opportunities in equity financing, bonds, and other financial instruments. The SEC aims to empower these enterprises with the means to invest in technology, explore global markets, and create new jobs.

“Our presence here reflects our shared commitment to unlocking the potential of MSMEs,” Dr. Agama said, pointing to the ‘GROW Nigerian’ initiative, which highlights sectors such as creative industries, agriculture, light manufacturing, fashion, education, entertainment, services, and tourism. “For these sectors to flourish, MSMEs need access to scalable financing solutions. By aligning the ‘GROW Nigerian’ initiative with capital market resources, we can empower these enterprises to contribute significantly to Nigeria’s economic growth.”

To further enhance MSME financing, the SEC is promoting the use of online crowdfunding platforms where investors can back small businesses and receive equity in return. Under the SEC’s 2021 guidelines for crowdfunding, these platforms must meet strict registration, operational, and reporting standards to ensure transparency and investor protection.

Earlier this year, the SEC, in partnership with GIZ (German Society for International Cooperation), hosted a stakeholder dialogue on crowdfunding, drawing participants from Morocco and Ghana. This event stressed crowdfunding as a powerful tool for mobilising funds through internet platforms, enabling small businesses to secure financing from a wide pool of individual investors.

Dr. Agama also commended the Ministry of Industry, Trade, and Investment, alongside the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), for their commitment to the MSME sector. He expressed optimism that the outcomes of the conference would lead to new strategies and partnerships that empower MSMEs and secure Nigeria’s economic future.