The NASD Over The Counter (OTC) market Securities Exchange is a market which facilitates secondary trading of all securities of public listed companies in Nigeria and the West African region. Its main focus is to act as a catalyst by facilitating access to capital by pooling stakeholders in the capital market to a secure and transparent environment. Those who trade in the exchange include issuers of equity and fixed income instruments, individual and institutional investors, accredited licensed traders and their participating institutions, settlement banks, clearing systems, capital companies and venture capital organizations.
At NASD Plc Exchange our focus is on being the hub of first call for capital formation in West Africa. This translates to us working to provide platforms for primary and secondary market liquidity. In the primary market, our focus is to ease capital raise process and provide secondary liquidity and transparency for investors who wish to play in our secondary market.
It currently has a market capitalization of about 514 billion naira. Considering the fact that the current SME finance demand is huge and largely unmet, Nigeria’s fast growing SMEs and startups need to think out of the box. They need to look at the flanks, beyond bank financing, which offers them a non-competitive interest rate, and venture capital that could dilute their shareholding.
Largely, startups and SMEs could approach the OTC market to raise long term funding which could make them competitive in their markets by offering some equity for sale. Examples of organizations which have leveraged this capital market tool include fast rising real estate companies Afriland Properties and Mixta Real Estate, consumer foods giants Dufil Prima and Frieslandcampina Wamco, among others.
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The OTC Exchange should learn from the Kenyan Stock Exchange which last year launched an incubator scheme for startups aimed at helping them grow, to become successful companies, and establish partnerships with global leading alternative exchanges like London Stock Exchange’s Alternative Investment Market, NASDAQ, and Shenzhen Stock Exchange’s Chi Next. Through this mechanism, Nigerian SMEs and startups could tap funds to drive growth despite not being listed on the primary Nigerian Stock Exchange.