The Securities and Exchange Commission (SEC) has revealed plans to ease its regulations on crowdfunding to improve access to funding for smaller businesses in Nigeria.
This announcement, made by the SEC’s Director- General, Dr. Emomotimi Agama, comes as the commission seeks to create a more supportive environment for micro, small, and medium enterprises (MSMEs) looking to raise capital.
In a recent interview, Dr. Agama explained that crowdfunding – a method of raising money online through public contributions – has evolved beyond its origins in creative industries. While it initially helped artists, musicians, and filmmakers gather financial support from the public, crowdfunding is now recognized as a valuable tool for small businesses and start-ups seeking investment to fuel their ventures.
The SEC introduced regulations for crowdfunding in 2021, which set out a framework for how companies can raise capital through registered platforms. These rules allow MSMEs with at least two years of operational history to raise funds by offering shares, bonds, or other investment instruments through the SEC-registered crowdfunding portals. The regulations also outline the roles of key players in the crowdfunding ecosystem, including the crowdfunding portal, intermediary, issuer, and investor.
However, Dr. Agama acknowledged that current limits on how much companies can raise may be too restrictive. Under the existing rules, medium enterprises can raise up to ₦100 million, small enterprises up to ₦70 million, and micro-enterprises up to ₦50 million within a 12-month period. Dr. Agama noted that these caps have been viewed as constraints, particularly for businesses seeking more significant capital to grow.
“We are actually re-evaluating these limits to make it easier for more businesses to participate,” Agama said. He hinted that the SEC may consider raising the fundraising ceilings on a case-by-case basis, allowing companies with larger capital needs to access more funds through crowdfunding.
This potential regulatory shift comes at a time when Nigerian businesses are grappling with a high interest rate environment, with the central bank’s benchmark interest rate standing at 27.25 percent. By easing crowdfunding regulations, the SEC hopes to provide smaller firms with alternative financing options, reducing their reliance on traditional, often costly, sources of credit.
The move is expected to bolster Nigeria’s MSME sector, which plays a critical role in the country’s economic development. As more businesses gain access to investment capital, the SEC’s regulatory adjustments could help drive entrepreneurship, innovation, and job creation across the country.
