adminDumisani Nsingo Senior Business Reporter
THE Zimbabwe Stock Exchange is waiting for approval from the Securities and Exchange Commission of Zimbabwe to establish an alternative exchange for Small and Medium Enterprises (SMEs), the Zimbabwe Emerging Enterprise Market (ZEEM), an official said. The setting up of the secondary bourse is likely to enable SMEs to access growth capital.In an interview ZSE chief executive officer, Mr Alban Chirume said the primary bourse’s board approved the listing requirements that were drafted by officials from the exchange and various experts for ZEEM.
The board went on to give the bourse the green light to contribute to a revolving fund meant to assist companies list on this junior market.
“The SMEs stock exchange is awaiting regulatory approval. We came up with the listing requirements for the exchange and it was approved by the ZSE board and was sent to the Securities and Exchange Commission for further approval, that’s the stage it is at the present moment,” Mr Chirume said.
The minimum equity for the SMEs bourse has been pegged at $250 000 while the minimum public shareholders will be 50.
The minimum number of shares to be issued will constitute 26 percent of the company shares.
He said listing expenses that the SMEs will have to incur include sponsoring brokers’ fee, fees for accountants, lawyers, underwriters, SECZ and ZSE among others.
An SME Exchange is a stock exchange dedicated for trading the shares or securities of SMEs who otherwise find it difficult to get listed on the main stock exchange platforms.
The concept originated from the difficulties faced by SMEs in gaining visibility and attracting sufficient trading volumes when listed along with other stocks on the main board of stock exchanges.
Some of the known markets for SMEs are AIM (Alternate Investment Market) in UK, TSX Ventures in Canada, GEM (Growth Enterprise Market) in Hong Kong, MOTHERS (Market of the high-growth and emerging stocks) in Japan, Catalist in Singapore and the latest initiative in China — Chinext. As a matter of fact, NASDAQ also started as an SME exchange.
SMEs and Co-operative Minister Sithembiso Nyoni said the Ministry was still engaging the Ministry of Finance and Economic Development as well as the private sector with a view of expediting the setting up of a secondary bourse for SMEs in an effort to enhance their growth.
“We are still pursuing the setting up of a stock exchange which is specifically for SMEs but the onus is not only for my Ministry but the Ministry of Finance and Economic Development and the private sector which are all involved.
“SMEs need some exposure and the setting up of this type of stock exchange will open windows for them because most of them are finding it difficult to finance their businesses and this special bourse stands to benefit them thus we are waiting to have it facilitated,” Minister Nyoni said.
The Minister said SMEs should also take an active part in the setting up of the bourse.
“The SMEs should also look for potential providers of equity funding, to attain more realistic capital structures. Stock Exchange is about money and not ideas only,” she said.
Minister Nyoni said the importance of SMEs to economic growth should be widely acknowledged considering that they contribute to job creation, and contribute significantly to Gross Domestic Product (GDP).
“Sometimes some people underplay the role being played by SMEs. It’s only that most of them are quiet due to issues to do with taxes and abuse by bigger players but if they are given their rightful place they can drive the economy.
“It’s not true that SMEs are evading paying taxes but the truth is that they are not incentivised. Financial institutions are lending at high interest rates which are not suitable for SMEs and Sedco is not well capacitated to fund them,” she said.
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