The Security and Exchange Commission (SEC) has announced plans to ease crowdfunding rules for small firms in Nigeria. The director of SEC, Dr Emomotimi Agama made the announcement in an interview.
While making the announcement, Agama noted that easing crowdfunding rules will assist small businesses and start-ups with access to investment capital that will aid their operations.
The crowdfunding rules encompass the framework within which a small business can raise money or equity capital. Also, it outlines the eligibility criteria and obligations of issuers, crowdfunding portals and crowdfunding intermediaries.
Under this regulation, small businesses with operating for at least two years, can access capital through a crowdfunding portal registered by the SEC. This will be done in exchange for the issuance of shares, bonds/debentures, simple investment contracts or such other investment instrument.
The decision to ease crowdfunding rules is comes on the back of an unfriendly business environment for MSMEs in Nigeria. At the moment, businesses are struggling with cost of operations, soaring inflation and an unstable exchange rate.
In addition, the Central Bank of Nigeria raised the lending rate to 27.25% marking the fifth consecutive increase in recent times. With this hike, businesses will pay more to access capital from deposit money banks.
Therefore, it is not surprising that the SEC is trying to ease its regulations for small firms. This will help them access loams easily and boost their operations.
