The Nigerian Stock Exchange (NSE) on Wednesday January 29, 2020 launched its “Growth Board” which aims to encourage companies with high growth potential to seize the opportunity of raising long term capital and promote liquidity in the trading of their shares.
The board also presents as an avenue for companies in their growth phase to leverage the NSEs platform and varied products and services to achieve their long term business objectives.
Oscar N. Onyema, Chief Executive Officer, the Nigerian Stock Exchange said the Growth Board is in line with the Exchange’s focus and drive to deepen the Nigerian Capital market and its support for Start Ups and Small and Medium Enterprises.
“This board is designed to offer relaxed entry criteria as well as less stringent ongoing listing requirements and allows for greater accessibility to capital flows, global visibility and credibility through corporate disclosures.
“The growth board also restructures current market segments to better meet needs along company’s entire lifecycle –that is Entry Segment – for companies with a Market Capitalisation from N50million and Standard Market for institutions with a Market Capitalisation from N500million. The segmentation of the boards also provides alternative options for interested investors to participate in each company’s growth journey”, Onyema noted.
The traditional role of the Exchange as an enabler of capital flow from areas of surplus to deficit holds good promise for its capability to support SMEs, as access to capital is the prime challenge faced by companies that are active in the SME sector.
To successfully achieve the NSE listed company’s growth strategy and listing objective, the Exchange said it will be collaborating with various strategic business partners and value added service providers to offer cost effective services designed to create a competitive edge for listed companies within their respective industries while stimulating investors’ interest through enhanced information delivery.
Services such as pre-listing diagnostics; institutional services (including audit services, financial advisory, legal advisory, corporate strategic advisory); investor relations; analyst coverage, corporate access and corporate governance will be provided, Onyema further said.
The Exchange will also provide tailored trainings on its learning and development platform “X-Academy” for capacity development and to promote increased Corporate Governance for Board and employees of companies on the Growth Board.
According to the Nigeria Bureau of Statistics (NBS), small and medium scale enterprises (SMEs) in Nigeria have contributed about 48percent of the national GDP in the last five years.
This segment of the economy also accounts for 96percent of operational businesses and 84percent of employment. With a total number of about 41.5 million enterprises, the SME segment accounts for nearly 90percent of companies operating in the manufacturing sector and 50percent of industrial jobs.
Despite these significant contributions by SMEs to the Nigerian economy, the reality and headwinds faced by operators in this segment are quite daunting.
The economic landscape in recent years has been quite challenging for corporates with small and medium scale enterprises experiencing some of the difficulties observed in the Nigerian macro landscape.
These companies have seen declining productivity rates largely caused by deficiencies in power supply; substandard trade facilitation infrastructure; lack of rightsized and right-priced financing, multiplicity of taxes/levies/fees; lack of innovation; and limited availability of requisite talent. This is further compounded with an absence of needed corporate governance to ensure maximised capacity utilisation and profitability for the companies.
In spite of the challenges faced by operators in the SME space, this segment of the economy continues to show progress and innovation. It is noteworthy to mention that the African tech space has seen a significant increase in the funding of start-ups in recent years.
In 2019, the number of investors, largely institutional, increased from the previous year by 61percent to 261 and funding rose by 47percent to $491.6 million which was received by 311 companies. Nigeria remains one of the lead markets in terms of total funding, securing $122 million.
“We have also witnessed increased support from multilateral organisations and government agencies. For instance, to promote funding for African SMEs, The African Export-Import Bank (Afreximbank) signed an agreement with the African Guarantee Fund (AGF) for a $30 million re-guarantee facility to support African Small and Medium Enterprises (SMEs) in December 2018. Additionally, The Central Bank of Nigeria in collaboration with the Bankers’ Committee also commenced the disbursement of N26 billion to MSMEs under the Agribusiness Small and Medium Enterprise Investment Scheme (AGMEIS) in 2018.
“From a growth perspective, Nigeria also had the single largest representation with 97 companies featured in the 2019 Companies to Inspire Africa (CTIA) report jointly produced by the London Stock Exchange and PWC Africa.
“This report featured 360 growth companies across 32 countries in Africa with 7 major sectors represented. The high representation by Nigerian growth companies clearly emphasizes the enormous opportunities present in the segment and the nation at large”, the NSE CEO stated further.