SEC Supports MSME Expansion Through Crowdfunding, Digital Equity Platforms

The Securities and Exchange Commission (SEC) has announced plans to support Small and Medium Enterprises (SMEs) in accessing capital by offering shares to investors through online platforms, allowing backers to receive equity stakes and participate in the businesses’ profits and growth.

Speaking at the 2024 National MSME Conference, Dr. Lamido Yuguda, represented by the Executive Commissioner for Corporate Services, Mrs. Samiya Hassan Usman, emphasized that digital platforms would play a vital role in driving sustainable growth for SMEs.

Dr. Yuguda emphasized that the significance of promoting innovation-driven economic growth is encapsulated in the conference theme, “GROW Nigerian: Sustaining a Digital and Innovation-Driven Economy.” He further stated that the SEC’s 2021 crowdfunding guidelines play a key role in accomplishing this goal by establishing the regulatory structure for online equity platforms that offer clear investment opportunities.

Equity crowdfunding platforms need to be registered with the SEC and follow regulatory guidelines, such as maintaining accurate records.

He mentioned that the SEC has implemented investment restrictions tied to income or net worth in order to safeguard retail investors.

The SEC renewed its dedication to creating a positive atmosphere for MSMEs to obtain funding, expand their companies, and use financial technology to grow. Yuguda added that the capital market provides MSMEs with the opportunity to secure long-term funding for expanding operations, investing in technology, and engaging in international trade through equity, bonds, and other financial tools.

In a move to address the financial challenges of SMEs, the Commission disclosed that it is in the advanced stages of establishing a new Office of Small Business Capital Formation. This new unit will provide tailored solutions to support companies raising capital through smaller offerings, empowering small businesses to grow and succeed alongside their investors.

The SEC highlighted that collaboration between the capital market and the MSME sector is essential for Nigeria’s economic transformation. Yuguda noted that MSMEs—active across sectors such as creative industries, agriculture, fashion, education, and manufacturing—play a crucial role in job creation, economic diversification, and export growth.

“By aligning the ‘GROW Nigerian’ initiative with capital market resources, we can help unlock the potential of these enterprises and drive sustainable economic growth,” he remarked.

The SEC also referenced its May 2024 collaboration with the German Society for International Cooperation (GIZ) to host a stakeholder dialogue on crowdfunding, attended by regulators from Morocco and Ghana. The dialogue aimed to strengthen investment and finance opportunities for MSMEs through innovative tools like online crowdfunding platforms.

Yuguda praised the Ministry of Industry, Trade, and Investment, along with the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), for their unwavering dedication to MSME development. He expressed optimism that the conference outcomes would result in new strategies and partnerships to further empower MSMEs and secure Nigeria’s economic future.

“Our shared commitment to unlocking the potential of MSMEs is essential for creating an innovation-driven economy, and the capital market must remain a vital enabler in this process,” Yuguda concluded.