AIHN at 30: Experts seek deeper capital market, SME funding

Nigeria’s capital market must accelerate regulatory reforms, widen access to long-term funding for small and medium-sized enterprises, and embrace digital innovation to sustain growth and attract more investment, financial market experts have said.

The experts spoke at the 30th Anniversary Symposium of the Association of Issuing Houses of Nigeria in Lagos on Tuesday, where they reviewed the evolution of the capital market and examined opportunities for deeper investment, innovation, and economic transformation.

Speaking during a panel session titled, “Three Decades of Catalyzing Capital: Lessons from the Past, Opportunities for the Future,” the Group Managing Director of Afrinvest West Africa Limited, Dr. Ike Chioke, said the development of the capital market would remain constrained by the quality and pace of regulatory reforms.

Chioke noted that successive changes to Nigeria’s securities laws had helped improve the market, but argued that regulators and market operators needed a more collaborative approach to developing rules that could keep pace with innovation. He added that the market had moved significantly from the era of paper-based transactions to more efficient capital raising and issuance processes, stressing that operators had also become more sophisticated.

According to him, the capital market has a critical role in financing economic development, but more attention is needed to help small and medium-sized businesses grow into stronger corporate entities capable of accessing long-term capital.

Chioke emphasised that SMEs remained major employers and contributors to economic activity, stressing that many of them needed support to formalise their operations, strengthen corporate governance, and become investment-ready. He advocated fiscal and regulatory incentives that would encourage SMEs to formalise their businesses, establish proper boards and accounting systems, and ultimately access long-term financing.

“An average entrepreneur wants to run from the process,” Chioke said, stressing the need for incentives that would make formalisation and compliance more attractive to business owners. He said the focus should particularly include businesses in sectors such as agriculture and local manufacturing, where stronger access to capital could help create jobs, expand production, and build wealth.

Also speaking, the Deputy Managing Director of Udo Udoma & Belo-Osagie, Mrs. Ozofu ‘Latunde Ogiemudia, said Nigeria could not afford lengthy gaps between major legislative reforms in the capital market. Ogiemudia noted that the Investments and Securities Act 2025 represented an important development, but said the legislation had built on reforms introduced by earlier laws and pension reforms. She observed that the 18-year gap between the 2007 Investments and Securities Act and the 2025 legislation highlighted the slow pace of legislative reform in Nigeria.

According to her, the rapid development of technology, including artificial intelligence, means that capital market regulation must continually adapt to changing market realities. She commended the Securities and Exchange Commission for using regulations to address some gaps while broader legislation was being developed, but called for sustained engagement between regulators, government, and market operators.

“The regulatory framework keeps up with the development that we see,” she said, stressing the need for Nigeria’s market to remain competitive with international standards. Ogiemudia also pointed to the growing ease of accessing investment opportunities digitally, citing the increasing ability of investors to participate in major transactions through banking and online platforms. She stated that the development showed Nigeria’s market was increasingly positioned to benefit from digitalisation, but warned that regulatory frameworks must evolve alongside technology.

On market stability, the Managing Director/Chief Executive Officer of FundQuest Financial Services, Mr. Abiodun Akinjayeju, identified stronger capital requirements for market operators and the demutualisation of the Nigerian Exchange as important developments. He noted that stronger balance sheets among capital market operators provided greater capacity to absorb shocks, invest in technology, and handle larger transactions.

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Akinjayeju added that the demutualisation of the exchange created a clearer separation between ownership, commercial operations, and regulation, thereby strengthening corporate governance. He explained that the new Investments and Securities Act had further broadened the regulatory framework, noting that strong institutions, effective regulation, and good corporate governance were essential to market stability.

On investment opportunities, Chioke stated that current market conditions provided a favourable window for companies seeking to raise funds. He noted that the Nigerian equities market had recorded significant gains, while inflation had moderated and the naira had strengthened, creating an opportunity for companies to consider accessing the market. He said issuers seeking medium-sized financing could explore transactions in the N10bn to N50bn range, while larger companies could take advantage of the capacity of the Nigerian market to attract both naira and foreign currency investment.

Chioke cited major transactions involving the Dangote Refinery and MTN as evidence of the potential of Nigerian assets to attract substantial domestic and international capital. He also urged companies not to rely exclusively on equity financing, saying debt, preference shares, and other instruments could provide alternative ways of raising capital without permanently diluting ownership. He advised companies to consider financing structures that matched their needs and allowed them to raise funds while retaining the long-term value created by their businesses.

Meanwhile, the Deputy Director and Head of Securities Offering at the SEC, Mrs. Adama Babadoko, said innovation and regulation should not be treated as opposing forces. She noted that the commission was adopting mechanisms including regulatory sandboxes and technology-driven supervision to allow innovation while maintaining investor protection, market integrity, and financial stability. Babadoko explained that products falling within the definition of securities would be regulated accordingly, while innovators could test eligible products within the regulatory sandbox before taking them to the wider market. She identified investor protection, market integrity, and financial stability as key considerations in the SEC’s approach to emerging technologies and digital assets.

The panelists also stressed the importance of compliance and corporate governance, particularly for businesses preparing to raise funds from the capital market. Ogiemudia stated that compliance should be treated as a continuous process rather than something companies address only when preparing for a transaction.

She urged SMEs to establish proper corporate structures, maintain audited accounts, constitute appropriate boards, and develop good governance practices from the beginning of their operations. She added that increasing cooperation among regulators meant that companies could no longer expect gaps between different regulatory systems to shield them from scrutiny.

Chioke similarly identified governance and timely financial disclosure as critical for companies seeking to access the capital market, advising businesses to keep their financial records and disclosures up to date to respond quickly when favourable market conditions emerge.

The President of the AIHN and Managing Director of Investment Banking at Chapel Hill Denham, Kemi Awodein, said the association’s 30th anniversary was an opportunity to reflect on three decades of contributions by issuing houses to Nigeria’s economic development. In her opening address, Awodein said issuing houses had played a major role in mobilising long-term capital through public offerings, rights issues, debt issuances, mergers and acquisitions, and other capital market transactions. She noted that the industry had evolved despite economic cycles, market volatility, regulatory changes, technological transformation, and changing investor expectations.

Awodein called for a more inclusive, resilient, innovative, and globally competitive capital market, with greater access to funding for SMEs, infrastructure projects, and emerging sectors. She stressed that digital transformation, fintech, sustainable finance, environmental, social, and governance considerations, and artificial intelligence were reshaping global capital markets and would require Nigerian market operators to continually adapt.

In a keynote address delivered on his behalf by Tony Iloka, a senior SEC official, the SEC Director-General, Dr. Emomotimi Agama, said the next phase of Nigeria’s capital market development would be shaped by technology, sustainability, and greater integration with regional and global markets.

Agama said the market had evolved from a largely paper-based system into a more sophisticated ecosystem involving exchanges, clearing and settlement infrastructure, fund managers, pension funds, insurers, and retail investors. He observed that emerging areas such as tokenisation, digital assets, open data, and artificial intelligence were changing the way securities were issued, traded, settled, and supervised.