Nigeria's Securities and Exchange Commission (SEC) has urged businesses and startups to explore crowdfunding, commercial papers and debt financing as alternatives to bank loans, saying companies require funding options that match their long-term growth plans.

Dr Emomotimi Agama, the SEC's director-general, outlined how companies can raise capital before pursuing an initial public offering (IPO) while speaking at Moonshot by TechCabal, a technology conference held in Lagos. He cautioned against the common practice of using short-term bank loans to finance long-term business needs, describing the mismatch as a risk that could undermine a company's growth.

“What most people have done is to go to the banks to raise short-term capital. So, how do you use short-term capital for a long-term business? That's a mismatch, a mismatch definitely that will drown you,” he said. The concern is structural: debt built for a short horizon comes due while the business it funded is still maturing.

Agama identified crowdfunding as one route available to smaller businesses, allowing them to raise money from people who know and trust their founders before seeking investment from a wider pool of investors. Through crowdfunding, businesses can collect relatively small amounts of money from multiple contributors who, depending on the structure, may receive equity, interest or another agreed benefit. According to Agama, the approach can help companies build credibility and demonstrate that investors are willing to back their plans before they pursue larger fundraising opportunities.

The SEC director-general also highlighted commercial papers as a means for businesses to access short-term funding while building a track record in the capital market. Commercial papers are short-term debt instruments that companies issue to raise money for operations and other financing needs. Investors lend money to the issuing company, which agrees to repay the amount under specified terms. Agama said businesses could use the instrument to test investor appetite and establish the credibility needed to pursue longer-term financing.

Debt financing, he noted, is an option for founders who want to raise money without giving up ownership of their companies. Unlike equity financing, in which investors receive shares in a business, debt financing allows a company to borrow money that it must repay, usually with interest. The company, however, takes on repayment obligations regardless of whether the business performs as expected.

“Sometimes too people do not want to let go of their companies,” Agama said. “What you can do also is you can raise debt, which does not dilute your equity or your ownership of the company.” Dilution, in this context, refers to the reduction in an owner's stake that occurs when new shares are issued to investors.

While public offerings often attract considerable attention, Agama said they are not the only route businesses can take to raise capital. Companies must also be prepared to share information with investors and demonstrate accountability if they want to attract funding from the public.

Agama said the SEC's role includes creating an environment that encourages companies to enter the capital market while protecting investors. He identified predictability, certainty and transparency as important factors in encouraging more businesses to seek funding through the market.

Nigeria has more than 45 million companies but only about 161 listed on its stock market, according to figures cited during the discussion — a gap that underscores how few Nigerian businesses ever reach the public market and the scale of potential entrants as the commission targets more African listings and a ₦750tn capital market. Agama said businesses needed to improve their governance, accountability, transparency and internal structures to become attractive to investors. In his framing, the instruments amount to stepping stones: each lets a company build the credibility, track record and accountability that larger raises — and eventually a public listing — require. Similar read: SEC targets African listings as Nigeria eyes ₦750tn capital market.

Turning to the digital asset sector, Agama encouraged companies operating in the space to approach regulators early to determine which rules apply to their businesses. He said the Investment and Securities Act 2025 provides a legal framework for the capital market, including the SEC's regulatory responsibilities over digital assets that fall within its remit.

The SEC has also established an Accelerated Regulatory Incubation Programme (ARIP) to provide a pathway for virtual asset service providers and other digital investment businesses to enter a supervised regulatory environment. The programme offers conditional approval-in-principle to eligible firms; it is not the same as a final licence.

Agama explained that the Central Bank of Nigeria regulates payment systems, while the SEC oversees other activities within the digital asset sector according to the nature of the business. He urged founders uncertain about their regulatory status to contact the relevant authorities rather than risk operating outside the law.

“If you come to me and say, 'Look, this is what we are doing. These are the challenges we are facing,' we will talk about it and get it sorted out,” he said.

His remarks come as regulators seek to coordinate oversight of virtual assets, an area where businesses may offer services that touch on payments, trading and investment products. A presidential executive order issued in July 2026 established a coordination framework for regulators dealing with virtual assets, as announced by the State House. For startups in the sector, the developments to watch are how the new coordination council aligns those overlapping remits, and how firms progress from ARIP's conditional approval-in-principle toward full authorisation — the elements that shape their regulatory footing.

Agama also pointed to the Dangote Petroleum Refinery's recently concluded public offer as an example of the potential to widen participation in Nigeria's capital market. He said investors from all 54 African countries had subscribed to the offer, which closed on October 27, while the refinery has separately reported investor applications from 120 countries worldwide.

Describing the capital market as an important tool for national development, Agama urged more businesses to prepare themselves to access it. For founders, his message was that raising capital need not begin with a major public offering: businesses can explore different funding routes as they grow, provided they build the structures, transparency and financial discipline required to earn investors' confidence.

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