CEO Opening Remarks – Growth Board Launch January 29, 2020

Oscar Onyema, CEO, Nigerian Stock Exchange (NSE)

January 29, 2020/NSE

Distinguished ladies and gentlemen, it gives me great pleasure to welcome you to the official launch of The NSE Growth Board. This platform is pivotal to our efforts in catering to a segment of the economy that hitherto has been neglected and perceived as a high risk and low reward venture by most service providers especially in relation to access to capital from financial institutions.

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.

I must thank all our strategic business partners and value added service providers for their drive and commitment to support and grow the SME segment of the Nigerian economy.  Without a doubt, the SME space remains critical to the growth of the economy. 

According to the Nigeria Bureau of Statistics, small and medium scale enterprises (SMEs) in Nigeria have contributed about 48% of the national GDP in the last five years. This segment of the economy also accounts for 96% of operational businesses and 84% of employment. With a total number of about 41.5 million enterprises, the SME segment accounts for nearly 90% of companies operating in the manufacturing sector and 50% 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 utilization 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 61% to 261 and funding rose by 47% 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 ₦26 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. 

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, I am pleased to unveil to you today the Nigerian Stock Exchange –  Growth Board.  The Growth Board 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.

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 i.e. Entry Segment – for companies with a Market Capitalization from ₦50m and Standard Market for institutions with a Market Capitalization from ₦500m. The segmentation of the boards also provides alternative options for interested investors to participate in each company’s growth journey.

To successfully achieve our listed company’s growth strategy and listing objective, the NSE 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.  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.

I therefore would like to use this medium to invite the growth companies represented in the room today and companies indicated in the CTIA report to join the NSEs Growth Board ecosystem and use the platform to achieve their strategic business objectives.

Let me once again acknowledge our strategic business partners and value added service providers for their collaboration with The Exchange and their commitment to deepening the Nigerian capital market.

Distinguished ladies and gentlemen, thank you for your attention and anticipated contributions. We look forward to having you on board and to be an integral part of the success of the Growth Board.

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