IMPLEMENTING THE NEW PARTNERSHIP FOR AFRICAN DEVELOPMENT (NEPAD) BY PROMOTING THE DEVELOPMENT OF THE SME SECTOR IN THE CONTEXT OF CAPITAL MARKETS IN AFRICA

by Chief Dennis O. ODIFE
(Article Reference: Document No.18, November 2002)

Compulsory Education for the Banks
One other benefit of the Nigerian Banks SME Funding Scheme is that all Nigerian banks are now obliged to study the equity markets and to understand how they are structured, how they are regulated and how they operate. The success of the Scheme will thus depend on how seriously they undertake this assignment, what they learn from it, and how they use such knowledge. African ownership of the NEPAD will similarly require all Africans, including Africans in Diaspora to study not only the NEPAD but also hopefully the promotion of the SME sector in Africa in the context of African capital markets. The SMIEIS is an equity scheme and banks will have to account to both the reserve banks and their own shareholders for how their own funds therein perform. They will not be able to do so unless they take a deeper interest in the equity markets of this great continent.

This reorientation of all African banks in the direction of equity markets would qualify as a revolution in its own right and may well be the greatest benefit arising from the SMIEIS to Nigeria in the new democracy, and to Africa. Similarly, the reorientation of all Africans in the direction of ownership and leadership of NEPAD through the promotion of the SME sector, and in the context of African capital markets could become one of the greatest achievements of the NEPAD and the African Union.

• It will focus attention on an internal source of some of the required funds,
  
• It will focus the attention of Africans towards investing in Africa;
  
• It will focus attention on African capital markets and hopefully showcase their inadequacies for the task ahead for immediate remedial action.
  
• It will invite the attention of all Africans in Diaspora to the great revival in Africa.
  
• It will provide a sound basis for genuine partnership.

I doubt if the foreign investor too will be left far behind in seizing the immense opportunities that will be unleashed by such a profound exercise.

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[8] D. O. Odife: "Changing Trends in Stock Exchange and Capital Market Development: Lessons for Africa" published by UNITAR, 'Capital Market Development: The Road Ahead - Document No. 13', Geneva, November 2000.
Federal Government Printer, Abuja. Report of the Panel on the Review of the Nigerian Capital Market,
Federal Ministry of Finance, Abuja, Nigeria, 1996.

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