(Bloomberg) -- Nigeria’s Securities and Exchange Commission plans to ease regulations on crowdfunding to enable smaller firms to raise cheaper financing amid rising interest rates.
Small and medium-sized companies haven’t been able to take advantage of rules that were introduced in 2021 to allow debt and capital to be raised online through crowdfunding because they are overly restrictive, SEC Director-General Emomotimi Agama said in an interview in Lagos, the nation’s commercial hub. Limits on the amount that can be raised were also seen as a constraint, he said.
“We are actually taking a new look to make it a little bit easier for people to come in,” Agama said. The new draft rules could be released as early as the first quarter of 2025.
Nigeria’s central bank raised its benchmark rate by 15.75 percentage points since May 2022 to a record 27.25% in a bid to curb rising inflation that is at two-decades high. Small businesses can pay more than 30% annual interest on their loans — which many can’t afford.
Other options for raising capital, such as a stock-market listing or debt issuance, come with too many costs and regulatory requirements.
The present regulations only allows firms that have an operating track record of at least two years to raise a maximum of 100 million naira ($61,000) a year through crowdfunding, according to Agama. The ceiling may be raised for firms “on a case by case basis” he said.
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