• Tuesday, May 28, 2024
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Lessons for Nigeria as Dubai sets gaze on emerging market SMES


Dubai, has announced the launching of a new stock market dedicated specifically for small and midsized companies, and analysts say the move holds a big lesson for Africa’s most populous country, Nigeria, which created the same but not much has been achieved with it.

Known as NASDAQ Dubai Growth Market, the It will enable fast-growing companies to achieve a “cost-effective” listing and form part of the Dubai Future District project, which includes boosting economic growth and creating jobs for its citizens,

“Imitating such a gesture will be fantastic for SMES operations in Nigeria,” said Abiola Gbemisola, an investment research analyst at Chapel Hill Denham.

According to her, provision of an SME dedicated stock exchange will significantly improve the operations of players in the sector beyond better financial status through an enlarged and diversified management base.

“Such a platform in Nigeria will help SMES access capital for expansion, people that have stocks in the company will be able to trade and will encourage transparency in the system. Furthermore, its management base will be enlarged giving room for a more informed decision-making process” Gbemisola said.

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As catalysts for economic growth, SMES are regarded as one of the most important and beneficial facilitators of economic growth especially in developing economies.

According to the World Bank’s report titled “Small and Medium Enterprises (SMES) finance”, revealed that SMES are major contributors to job creation and economic development, estimating that by 2030, 600 million jobs will be needed to absorb the growing global workforce, which makes SME development a high priority for many governments around the world.

“However, access to finance is a key constraint to SME growth; it is the secondmost cited obstacle facing SMES to grow their businesses in emerging markets and developing countries.” the report states.

In preparing its entrepreneurs for a stable future void of financial constraints, Dubai established the NASDAQ Dubai Growth Market, a stock market dedicated to small and mid-sized companies which will also host companies from the UAE as well as those from outside looking to expand in the region.

Hamdan bin Mohammed, Prince of Dubai, the United Arab Emirates who announced this via his twitter handle said the stock market will begin operations in early 2021, adding that SMES can list if they are valued below $ 250 million, and have a minimum operating history of one year as against the three years required for NAS

DAQ Dubai’s main market. It will allow the owners to carry out an initial public offering (IPO) while selling a minimum of 25 percent company shares.

Mohammed also said this will enable fast-growing companies achieve a costeffective listing and form part of the Dubai Future District project while reinforcing the UAE and Dubai’s established role as the Mideast’s business and finance hub. In addition, the market will support young businesses and open new opportunities for entrepreneurs, to help them expand, attract investors and finance their projects while allowing businesses to discover new opportunities that can drive the local, regional and global economy forward.