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“We have registered eight nominated advisors and we are still in the process of approving another five. These advisors will have to do more to look for clients and bring SMEs on board,” NSE head of marketing and product development Donald Ouma said.
Ouma, however, said they anticipate some listing on the segment before the second half of this year. He said the creation of the GEMS was meant to attract more business at the bourse, allow the exchange to diversify its revenue streams and allow SMEs to raise capital for growth and expansion.
“It may be too soon to know the uptake of the GEMs because there are some formalities to observe. However, my other worry about this market is that I don’t think it has been given the publicity it requires,” said John Kirimi, the executive director at Sterling Capital and chairman of the Kenya Association of Stockbrokers and Investment Banks.
The NSE reckons that a special market division for the SMEs will help them gain access to manageable and affordable capital for growth and expansion, and provide an exit strategy for family owned business enterprises through separation of ownership and management.
NSE’s Alternative Investment Market Segment and the Main Investment Market Segment have stringent listing requirements, which have locked out small businesses from tapping into the capital markets. The SMEs market is expected to provide a graduation platform to the main market segment of the stock exchange and provide a wider range of investment opportunities to investors (institutional and retail).
SMEs have been unable to meet the minimum listing requirements such as having an asset base of between Sh20 million and Sh100 million, a shareholder roll of between 100 and 1 000 and the cost of making disclosures as a public firm.
SMEs are currently deprived of affordable credit from commercial banks, which still view them as risky borrowers and often place tight lending requirements before advancing credit. Difficulties in accessing financing have held back small enterprises from achieving their full potential, despite entrepreneurs in the sector emerging as an engine for growth and employment creation in corporate Kenya. — CAJ News.
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