NASME kick against bill to compel members quoted on stock market

Nigerian Association of Small and Medium Enterprises (NASME) has kicked against a bill seeking private companies with total assets exceeding N80 billion to be quoted on the stock exchange.

This is coming as the National Assembly is warming up to pass the bill now at the second reading. NASME warned that the bill will pose serious danger to SMEs as it will frustrate their efforts to grow.

The bill seeking conversion of private companies with total assets exceeding N80 billion into public liability companies has passed second reading on the floor of the House of Representatives but Executive Secretary of NASME, Mr. Eke Ubiji, said the bill would cause more havoc for private enterprises that are currently operating in Nigeria.

According to him, the conditions before any SMEs could be included in The Exchange Alternative Securities Market (ASeM) demands that they should subject themselves to proper scrutiny by the public and regulatory authorities, a development which Eke said will frustrate SMEs to grow.

“I hope those behind the bill understands issues concerning listing of companies on  the Stock Exchanges.  I am aware that Nigeria Stock Exchange (NSE) has a platform to accommodate SMEs. They did it through ASeMs for SMEs to be listed and it is voluntarily.

“There is corporate governance issue among other conditions given before companies are accepted on that platform.  If the money of N80 billion total assets is general, then it portends great danger.

“We must have reached a certain level of development before urging companies with large assets to be listed on the Exchanges. You don’t need somebody to tell you the implications of the bill, ” he stated.

Speaking on the N220 billion intervention fund for SMEs by Central Bank of Nigeria, he said, “Five banks operating in Nigeria have signed a Memorandum with CBN to access the fund.

He explained that harsh interest rate is scaring banks to access the funds.

“The interest rate should not have gone beyond nine per cent but in the commercial banks, interest rate on loan is very huge.”

The Lagos Chamber of Commerce and Industry (LCCI) and other Organised Private Sector (OPS) operators have expressed concerns over the proposed bill to compel private companies to convert to Public Limited Companies (PLC), noting that the bill is likely to impact negatively on local and foreign investment.

The president, LCCI, Alhaji Remi Bello explained that the move to convert private companies to PLCs may also lead to considerable loss of revenue to the government and break up of companies to circumvent the requirement of the bill.

Bello who was represented by the deputy president, LCCI, Mrs. Nike Akande at a stakeholders’ forum on private companies’ conversion and listing bill in Lagos, said the bill under consideration, which seeks to force private companies whose shareholders’ funds exceed N80 billion, or whose annual turnover and total assets exceed N80 billion to get their shares listed on the Nigerian Stock Exchange (NSE) had undergone its second reading and if successfully passed into law, would become an act that will oblige private companies to convert  to PLCs as prescribed in the bill.

“Our preliminary review of the proposed bill shows that it will likely impact on local and foreign investment and the broader economy. Also the NSE may not have the depth and liquidity needed for the investment arising out of the mandatory listing of these companies,” he said.

Investigations by Nigerian NewsDirect revealed that Federal lawmakers are divided over the bill that compel companies with total assets and turnover in excess of N80 billion to be listed on Nigerian exchanges

House of Representatives deputy committee chairman on capital markets and sponsor of the bill, Hon Chris Azubogu, while speaking exclusively with our correspondent on a telephone chat said all parameters were in place before presenting the bill to the lower chamber of the National Assembly.

The Chairman, African Capital Alliance, Mr. Dick Kramer, noted that Nigeria is likely to experience a repeat of the aftermath of the indigenisation bill if the bill is passed, saying that the bill will drive away foreign investment.

“This is not the time to play with private investment. If you pass the bill, the downturn of the economy will get much worse for the next two years. The Nigerian investment industry is in its early stages, what is needed is to create an enabling environment for private businesses to thrive and also develop an attractive private sector,” he said.

A Director with the British American Tobacco, Nigeria (BATN), Mr. Shola Dosumu in his remarks, said going forward, private investments are totally against the bill, and called for group campaign plan to oppose the bill.

“It serves no purpose for private companies. I do not see the bill coming into light. This is a private members’ bill and not a federal government bill. We are totally against the bill,” he said.