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How The Nigerian Capital Market Can Support MSME Financing

Capital Market	995 VIEWS
Capital Market
995 VIEWS

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Tuesday, February 23, 2021 / 10:00AM / Ottoabasi Abasiekong for WebTV / Header Image Credit: Centre for Financial Inclusion

With over 40m Micro, Small and Medium Enterprises (MSMEs) in Nigeria a major challenge remains access to finance at affordable rates. Mr. Franklin Odoemenam the Managing Director of Fragg Investment Management made this point while discussing the subject "Improving Financing for MSMEs Through the Nigerian Capital Market".

According to Odoemenam MSMEs can through the capital market access capital formation through equity and bonds, to scale their operations and create value in the economy. To this effect he said Fragg Investment Management, was exploring a partnership with the Nigeria Stock Exchange (NSE) to support MSMEs.

Speaking further he noted that companies who access the market, may secure capital at a favourable coupon rate with no requirement for collateral.

He identified the following primary challenges that MSMEs experience in Nigeria when it comes to financing;

Lack of access to funding
High interest rate
Financial institutions seeing a very high percentage of risks in MSME financing and
The Hurdles of collateral in accessing loans from the banks

Looking at the dynamics of financing and support for MSMEs, Mr. Odoemenam stressed that with the global shift to sustainable development, the quest for companies to become ESG (Environment, Social and Governance) compliant has become a key requirement for accessing impact investments.

He acknowledged the various interventions from the Central Bank of Nigeria (CBN), Bank of Industry (BOI) and Development Bank of Nigeria (DBN) but stated that there was still a huge gap in MSME financing.

The investment consultant called for creative products and services from the financial services industry and capital market to address the MSME financing gap in Nigeria.

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