SMEDAN Identifies Factor For Success of Third-tier Market
 13th JUL 2007

By Michael Eboh

Following efforts to ensure a sustainable economic development  through the establishment of a structured and efficient Micro, Small and Medium Enterprises (MSMEs), the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), has called for a relaxation of the stringent listing conditions of the Nigerian Stock Exchange (NSE) for SMEs.

Speaking during a stakeholders’ workshop for SMEs organised by the NSE on Tuesday, the Director-General of SMEDAN, Mrs. Dupe Adelaja stated that the listing rules should be more relaxed than that of the Second-Tier market in other to admit more SMEs in the scheme.
According to her, “In order to ensure that we have a more robust and very liquid third-tier market, the listing conditions for the Third-tier market should be more relaxed than those of the Second-tier in order to admit more SMEs, thereby, ensuring the success of the scheme.”

She called for an effective partnership between SMEDAN, the NSE, and other public and private sector institutions in order to ensure that the SMEs are attracted to the capital market and also ensure that majority of them are able to meet some of the inevitable listing conditions of the market.
She decried the attitude of banks towards SMEs and called on the banks to intensify efforts at nurturing SMEs to successful and profitable ventures by increasing their support to the sector through their expert and professional advice.

She reiterated SMEDAN’s willingness to partner with the NSE through its SMEs’ information deployment, mentoring and capacity building programmes in ensuring that SMEs clusters are re-organised and re-formed for listing, while she advised stakeholders to learn from the experiences witnessed in the Second-tier market to avoid the same weaknesses in the proposed Third-tier market.   
She identified the capital market as a veritable source for medium and long term funding for SMEs as opposed to the money market and called for the combination of both in reasonable manner.  “In addition to this Third-tier move to improve the access of SMEs to public equity, a synergy between capital and money is essential for improved overall financial access”, She noted.

The Director-General of the NSE, Dr. (Mrs.) Ndi-Okereke Onyiuke who was represented by Alhaji Rasak Oladejo, former Deputy Director-General of the NSE disclosed that less than one per cent of companies registered by the Corporate Affairs Commission (CAC) were quoted on the NSE due to there poor operating status and financial conditions which did not meet with its listing requirements.
She stated that the NSE on realising the importance of the SMEs as engine growth of the nation, decided to create the Third-tier market to ensure increased participation of the SMEs in capital market activities for sustainable development.

She further stated that the market is designed to address to the needs of companies with growth potentials but who do not meet the listing requirements of either the first or second-tier securities market.
She said, “It is our belief that through this window, we should have at least 50 per cent of the registered SMEs taking advantage of the opportunities in the capital market to become our future blue chips that will replace most of the current multinational companies that are now the toast of our market.”

Source: vanguard

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