Abstract

This paper examined why Small and Medium Enterprises (SMEs) do not procure long term funds from the capital market as well as ascertain the conditions under which small and medium enterprises will be enabled to source funds from the capital market. It gives an insight that may help owners of SMEs in Nigeria to know other options of accessing long term funds from the capital market; the unending benefits associated with listing on the capital market as well as the terms and conditions for enlisting on the exchange. The study adopted a descriptive survey. 80 small and medium enterprises in Anambra state were sampled, 40 each from Onitsha and Nnewi. The choice of the two areas was guided by the fact that they have large clusters of small and medium enterprises in the state. Questionnaires were administered on the owners of these SMEs and/or representatives (in cases where the owner was not available at the time of administering the questionnaire). The data generated from the survey were tested using the Chi- Square (X2). Simple tabulation was used to present the survey findings, percentage distribution of the respondents was equally presented. The study reveals that information about the activities of the capital market among SMEs specifically, in respect of its relevance to access long term finance is still very low. The few SMEs that are aware fear losing control of their companies to wealthy shareholders. The study also finds that the listing requirements constitute major constraints to procuring long term finance by SMEs. In the light of this, the Nigerian Stock Exchange should carefully consider the constraints highlighted by the respondents with a view to reviewing them for the benefit of SMEs in line with global best practices. The regulatory authorities should formulate policies that would engender a more investment friendly climate particularly in the areas of infrastructure, interest rate, inflation, etc. to make procurement of long term finance more attractive to investors..

Keywords: Industrialization; Catalyzing development; Employment; Urban and rural; Small and Medium sized enterprises

Abbreviations: SMEs: Small and Medium Sized Enterprises; CBN: Central Bank of Nigeria; ASeM: Alternative Securities Market; NCI: National Council on Industry; NSE: Nigerian Stock Exchange; CAC: Corporate Affairs Commission; SEC: Securities and Exchange Commission; ICT: Information and Communication Technology; NIDB: Nigeria Industrial Development; PBN: Peoples Bank of Nigeria; NERFUND: National Economic Reconstruction Fund; BOI: Bank of Industry; ADB: Africa Development Bank; IFC: International Finance Corporation; GDP: Gross Domestic Product