SEC to begin regulation of crowdfunding activities by small businesses

Mary Uduk, acting director-general of the Securities and Exchange Commission (SEC), said the commission is working on a framework to regulate small businesses that use crowdfunding to raise capital.

In an interview with journalists, TheCable inclusive, on the sidelines of the ongoing annual meetings of the World Bank and International Monetary Fund (IMF), Uduk said the move is aimed at protecting investors.

“Investors’ confidence is central to our job as the regulator of the capital market. People must have the confidence to invest,” she said.

“With crowdfunding, private companies like SMEs can raise money raise long-term funds using regulated platforms. The platform of the crowdfunding will be regulated by the SEC.”

Some businesses in the country have been using technology to reach small-scale investors; seeing it as a convenient way of raising capital rather than approach banks.

Speaking on the performance of the capital market in 2019, Uduk said the market has received a significant boost with the listing of MTN Nigeria and Airtel on the Nigerian Stock Exchange.

“The primary market has witnessed a new trend in the last one year with the listing of the telecom companies (MTN Nigeria) and also the recent IPO and dual listing of Airtel,” she said.

“The dual listing of Airtel signifies the interest of the foreign issuers into the Nigerian capital market.

“Consequent to the Airtel IPO, some offshore companies are in discussion with the commission for an IPO that will be dually listed in Nigeria and the UK.

“If you look at the equities market, especially on the NSE, the market has lost about 16% so far this year, on the back of relatively weak economic fundamentals and investors sentiments.

“However, as we are into the last quarter of the year, we hope to also see some improvement in the equities segment, especially as investors see opportunities to pick low-priced stocks.

“As you know, even in a down market, there are still opportunities, since what is down has a higher probability of rising.”

On the back of MTN Nigeria and Airtel’s listing, Uduk said it would be a great thing for more companies in the oil and gas sector to list on the stock exchange.

“As you rightly said, the listing of MTN and Airtel was a very positive outcome and they substantial raised the capitalisation of the equities market. It also meant we now have the telecoms sector of the economy represented on the stock market,” she explained.

“Therefore, it will be great to also have the petroleum sector well represented on our market and having NNPC will make it greater. Recall that one of the provisions of the petroleum industry governance bill (PIGB), if approved, is to list 10% and an additional 30% of NNPC companies between five and 10 years.

“If this is done, it will significantly improve the size and performance of our market. Meanwhile, it will also be important for the NNPC companies to be well commercialised such that they can return positive profits to their shareholders.

“I believe that with the country’s potential in the oil and gas sector as well as with appropriate governance and commercialisation policy, investors, the market and the entire economy will benefit from such listing and it will be a great achievement indeed.”

Uduk assured that the commission would continue to seek new ways to expand the market and release instruments that would make investments easier.