ROLE OF NIGERIAN CAPITAL MARKET IN FINANCING BUSINESS ENTERPRISES
Need help with a related project topic or New topic? Send Us Your Topic
DOWNLOAD THE COMPLETE PROJECT MATERIAL
ROLE OF NIGERIAN CAPITAL MARKET IN FINANCING BUSINESS ENTERPRISES
Chapter one
INTRODUCTION
1.1 Background of the Study
Every emerging capital market in the world has a history, and Nigeria is no exception. The Nigerian capital market makes up a tiny but growing sector of the country’s economy. The capital market institution in Nigeria tries to investigate not only how it was created, but also how it has evolved to effect the Nigerian economy.
The Nigerian capital market is primarily a market for long-term investments, with corporate stocks and long-term debt securities being issued and exchanged. It is a market governed by the Securities and Exchange Commission, the top regulatory organisation in Nigeria’s capital market.
The capital market is so important to the development of any economy that no counting system can risk its existence unless measures to regulate market activity are implemented.
As a result, at various points in time, the government attempted to support the orderly expansion and development of the market for sustainable investment opportunities.
The Nigerian capital market originated during colonial times, when the British government that ruled Nigeria sought funding to administer the local administration. Most of these funds came from agriculture, food marketing, and solid mineral mining.
When the colonial government realised that these sources were insufficient to satisfy its rising financial responsibilities, it decided to broaden its revenue base by altering the system of revenue mobilisation, taxes, and other payments.
It also recognised the need to raise cash from the public sector to cover transitory gaps in funding availability. As a result, it decided to construct a financial system by laying the groundwork for its operation while an organised private sector developed.
Later, in 1957, the colonial government established the Professor Barback Committee to investigate the methods of building a share market in Nigeria, with one of the committee’s main topics being the establishment of a capital market in Nigeria.
Then, with the establishment of the Nigerian Central Bank in 1959, followed by the Lagos Stock Exchange establishment in 1961, which was later transformed as the Nigeria Stock Exchange by the Lagos Stock Exchange Act in 1959, a solid foundation was laid for the launch of the Nigerian capital markets for trading financial instruments of indefinite marking required to find the economy at large.
The most efficient production of products and services has long been the only feasible and dependable alternative for an economy’s development, growth, and survival.
The development of small-scale firms in Nigeria is thus a critical component of the growth strategy. Small and medium-sized firms not only help to raise living standards, but they also generate significant local capital and reach high levels of productivity.
However, it was discovered that the most significant void in Nigeria’s industrial growth process in recent years has been the lack of long-term financing for small-scale enterprises.
In other words, the importance of the small and medium-sized enterprise equity investment scheme stems from the vital economic function of the real sector, which engages in actual production in economic growth.
The concept of SMEs in Nigeria was initiated by the Central Bank of Nigeria, with the voluntary cooperation and efforts of the bankers committee. The initiative requires that all banks in Nigeria set aside 10% of their profit before tax each year for equity investment in small and medium companies. This arrangement will alleviate the burden of interest and other expenses connected with traditional bank financing (Anyamiu,1993).
As a result, the programme is a novel means of funding the real sector, with significant development potential. As a result, the bankers committee’s approval on June 19, 2001, and the subsequent inauguration of SMEs by President Olusegun Obsanjo of the Federal Republic of Nigeria on August 21, 2001, provided impetus for the scheme’s implementation in Nigeria. Onyema (2013).
Need help with a related project topic or New topic? Send Us Your Topic