Relying purely on short-term commercial bank loans with high interest rates presents a significant structural hurdle for emerging enterprises. For mid-sized businesses in Nigeria looking to expand operations or build factories, these high-interest loan cycles can drain working capital. This dynamic often leaves businesses unable to secure the long-term, patient equity required for sustainable expansion.
To open up alternative pathways for institutional funding, the Lagos Chamber of Commerce and Industry (LCCI), in partnership with NASD PLC, convened a high-level Stakeholders’ Forum in Lagos.
Focused on the theme “Financing Growth: Propelling the Real Sector Through the Capital Market,” the forum brought together financial regulators, stockbrokers, and corporate founders to establish a structured process for moving small and medium enterprises (SMEs) away from expensive commercial bank debt and toward the formal capital markets.
The OTC Exchange Advantage: Diversifying Capital Solutions
A central focus of the forum was expanding the use of the NASD Over-the-Counter (OTC) Securities Exchange. For growing companies that may not yet meet the rigorous listing requirements of the main board on the Nigerian Exchange (NGX), the OTC window offers a regulated, flexible alternative for issuing shares.
Longe Eguarekhide, Managing Director of NASD PLC, noted that bridging this liquidity gap requires matching corporate funding needs with investor demand: “Businesses require more financing options, investors require more opportunities, and the capital market provides that vital structural bridge.”
Oludare Fajimolu, Head of Research and Strategy at NASD PLC, explained that utilizing the OTC platform allows private companies to improve their transparency and attract incoming capital while gradually building toward a full public listing.
Dismantling Governance Gaps: The Criteria for Investment
A primary talking point among the panelists was the structural weakness found within many local businesses. A lack of formal business organization remains a major obstacle preventing institutional investors from deploying capital into otherwise viable firms.
To successfully clear the due diligence requirements of institutional fund managers, the forum outlined several mandatory operational baselines for SME promoters:
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Audited Financial Ledgers: Shifting away from basic cash-book accounting to adopt standardized, multi-year audited financial statements.
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Transparent Cash Flows: Maintaining clear, verifiable bank records that distinctly separate personal family expenses from corporate operational funds.
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Corporate Governance Frameworks: Establishing active, independent boards of directors to guide management and protect minority shareholder rights.
Regulatory Backing and the Macro Outlook
The move to bring more real-sector businesses onto structured exchanges has strong support from apex regulators. Representing the Securities and Exchange Commission (SEC), Ojone Kabir (Deputy Director and Head of the Office of Advocacy for Small Business Capital Formation) emphasized that the capital market offers a wide range of asset classes—including equities, fixed-income securities, and structured private placements—tailored to help companies innovate and scale.
Director-General of the LCCI, Dr. Chinyere Almona, summarized the chamber’s approach, noting that the real sector serves as the primary driver of national economic growth. By working with NASD to build corporate transparency, the initiative helps SMEs access the patient capital needed to expand production lines, create jobs, and support long-term economic stability.
