This project work is centred on the impact of the Second-Tier Securities Market on small-scale indigenous industries in Nigeria.


The study was conducted to identify the extent to which indigenous businesses in Nigeria are using the Second-Tier Securities Market of the Stock  Exchange as a source of long-term finance for their investment.

Four research questions and three hypotheses guided the study. The population for the study consisted of all the population selected from small-scale enterprises and approved stockbrokers including those that successfully floated indigenous business in the Second-Tier Market. A sample of five (5) small-scale enterprises in Lagos was drawn through random sampling technique. A structured questionnaire containing 18 items was used for the data collection. A point scale in the questionnaire and percentage were the statistical tools used for the data analysed. The three hypotheses were tested at 0.05 level of probability.


The findings of the study revealed among others that: the response on the second-tier securities market is very low due to the general level of awareness on the economy even among the literate population. Even with the small number of educated population who invested in the stock market, the demand for shares often exceed supply because of the small proportion available for trading.


Based on the findings of the study, a number of recommendation were made among which is that a formal market for unlisted securities should be developed so that companies which do not wish to be quoted on the Stock Exchange could approach this formal market.                                        



Title Page

Certification                                                                            i

Dedication                                                                    ii

Acknowledgement                                                                  iii

Abstract                                                                      iv

Table of Content                                                           v


Introduction                                                                           1

1.1    Background of the Study                                             2

1.2    State of the Problem                                                     2

1.3    Purpose of the Study                                                   4

1.4    Significance of the Study                                              6

1.5    Research Questions                                                     7

1.6    Scope of Study                                                              7

1.7    Definition of Terms                                                       8



2.1    Relevant Theories                                                         9

2.2    Indigenous Business in Nigeria                                  13

2.3    Contribution of Small Scale Business                        14

2.4       The Problem faced by Small Scale Enterprises

In Nigeria.                                                                     17

2.5       Requirements for Admission into Second Tier

Security Market                                                            18

2.6       The SSM Prospectus                                                    20

2.7       Assessment of the Impact of SSM New Strategies      21

2.8       Constraints of Sources of Finance                              23



3.1    Research Design                                                           24

3.2    Area of the Study                                                          24

3.3    Study Population                                                         24

3.4    Sample and Sampling Method                                    25

3.5    Data Collection Instrument                                         25

3.6    Administration of Data Collection                     26

3.7    Instrument (Method)                                                    26

3.8    Validity of the Instrument                                            26

3.9    Reliability of the Instrument                              26

3.10  Method of Data Analysis                                              26


 OF DATA          

4.1    Introduction                                                                 27

4.2    Data Analysis                                                               27

4.3    Chi-square Method                                                      27

4.4    Preliminaries Analysis                                        29

4.5    Research Questions 1-12                                            20

4.6    Hypothesis Testing  1-3                                               39


5.1    Summary of Findings                                                   40

5.2    Conclusion                                                                   41

5.3    Recommendations                                                        41

          Bibliography                                                                 43

          Questionnaire                                                               44                                                    







The small scale industrial undertaking has been widely acclaimed as the bedrock for any meaningful industrialization programme of any nation especially in less developed countries. It is in realization of this that government all over the world has devoted much of the sources and effort towards the development of such industries. In Nigeria for instance, the government started its deliberate efforts to develop this sector since the early 70s through policies contained in the National Development plans. Furthermore, financial institutions particularly the development, commercial and merchant banks have been made to extend to a certain percentage


Despite all those efforts, the growth of small scale industries has been greatly hindered mostly by lean financial resource of their promoters.         Most of the business concerns do not have access to the capital market from where long term finance suitable for sustenance of business expansion could not meet the requirement that would afford them the opportunity of raising funds through the capital market.


Nigeria entrepreneurs have been apathetic to seeking public quotation by getting listed on the Nigerian stock exchange. As at 1982, only three wholly owned Nigerian companies were listed on the Nigerian stock Exchange market though the Nigerian stock exchange had been in existence since 15th September 1960. a significant move towards public quotation among Nigerian companies was achieved during the indigenization exercise of 1972.


The programme compelled hitherto foreign dominated business enterprises to all carrying consequently the number of listed companies as at the end of may 1985 moved up to 44 but it is prompted a seminar on public quotation for indigenous companies organized by the GLAXOSMIHKLINE NIGERIA PLC in Lagos 1n 1981.

A.           High cost of seeking quotations

B.          Fear of losing control of the business upon obtaining quotation

C.          Personal convictions (Egocentric reason)

D.          Reluatative disclose occurrence financial information little or no knowledge of the capital market


In effect the resolutions formed the bedrock of the introduction of the second tier security market (SSM) which was launched on 30th April, 1985. In Nigeria, the SSM is per after then the unlisted company Market (UCM) in the unit kingdom its primary aim is to provide a platform for small scale businesses quotation. The main impetus for the establishment of the second tier security business is to seek quotation on this market.



A company has many financial consideration to make but the main one fall into three broad categories. The first deals with the determination of a company’s total financed needs, the second relates to the acquisition of the optimal mix of such financial needs from different institutions while the third is primarily concerned with the appropriate management of the monetary instrument including cash that the company has of important to the study is the second aspect which deals with the acquisition  of a company’s predetermined financial needs.


A firm’s capital structure is mad up of its equity, debt and retained earnings. The attempt to strike an optimal composition in these components poses some problems, which relates to the desirability of each source, the true cost of alternative funds and the differential treatment given to firms with respect to accessibility to funds. It is strongly held that small firms are discriminated against the market for funds and this only implies that there are imperfections associated with the size of firms requesting funds from different sources.



Although this study is an academic exercise in fulfillment of academic qualification but will at the end of the day study the extent to which indigenous businesses in Nigeria are using the second tier security market (SSM) of the stock exchange as a source of long term finance for their investment . the SSM is a new development on the Nigerian stock Exchange (revolved in April, 1984) to cater for the need of indigenous firms which are mostly small in nature. Until the evolution of the SSM, the stock exchange market was inaccessible to the small enterprises as the requirements for listing were two stringent as the requirements for listing were two strigent the costly for them. Since its inception in 1985, only thirty small and medium enterprises have so far qualified and is listed on the SSM despite the relaxation of requirements for entry as observed from the first phase of the project.


The appraisal given to the thirty companies on the SSM was based on the growth prospects of the companies and their significance to the national economy. In comparing the listed Companies securities, it was observed that instead of the five year trading record required of the listed companies, the SSM companies are required to provide a trading record of three years. This makes entry into SSM easier for them because most of them are young and not have sophisticated trading records over a long period.


It is also stipulated that not less than 25 percent of the issued share capital of the listed companies has been made available to the public but in the case of SSM companies, at least 10 percent of its shareholders capital must be made available to the public while the number of shareholders in the former group must not be less than 500 and the number in the latter group is limited to 100.


Therefore, the purpose of this study is to:

*        Study the extent to which indigenous businesses in Nigeria or Lagos are using the second tier security markets (as of the Stock Exchange as a source of Long term finance   for their investments.

*        Study the objectives of the second – tier security market with a view to assessing how far they are being met;

*        Carry out an inventory of all the firms that have so far been listed and analyze their status;

*        Identify the reason for the low response of indigenous companies in getting listed on the SSM observed on earlier study;

*        Determine how the requirements for the listing are perceived by the indigenous businessmen n the light of development stage of the economy;

*        Determine the contribution of the SSM to economic development of Nigeria;

*        And to suggest solutions to the problem identified from the study.



This study is important for the fact that it will provide explanations for the operation of the stock market in Nigerian and would offer suggestions on how best to exploit the market for maximum benefits. The significance of the study further includes:


·                    The study will identify the current level of the efficiency attained by the stock market, glaxosmithkline  Nigeria PLC.

·                    The study will identify the current level of the efficiency attained by the stock market, glaxosmithkline Nigeria PLC.

·                    The  study is expected to put forward  ideas that will make the flow of information about the market efficient  and effective

·                    This study will also ascertain the cost of listing with the market and if necessary effects a change on the current position.

·                    The study will also identify improving the professional status of the operators of the company.



The scope of the study is limited to Lagos i.e al the branches of Glaxosmithkline Nigeria Plc in Lagos state




In the 1989 industrial policy of Nigeria small scale industries were defined as those with investment of between N100,00 and N2million exclusive of land but including working capital . industries with investment cost exceeding N100,000 including working capital but excludes land as regarded as micro or cottage industries.


A Capital market is a mechanism which long term funds with maturity of more than one year are sourced instruments traded in the capital market include equities, debentures, stocks, gil – edged securities, state and municipal bonds and financial derivatives such as options, futures and warrants – Ekinen (1993 – 1999)



Money market is a mechanism through which short – term funds with maturity of less than one year are, sourced.

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