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New sector for SMEs to list at bourse

NAIROBI, Kenya Oct 29 – A new market segment for Small and Medium Enterprises to list on the Nairobi Stock Exchange is expected to be in place by June 2011.

Capital Markets Authority Chief Executive Officer Stella Kilonzo said on Friday that the regulator was currently working on a new framework to be used to govern the new class of investors.

Mrs Kilonzo also said the CMA was seeking proposals from SME stakeholders on the issues they would like incorporated.

"The capital market is expected to play a critical role in Kenya\’s development agenda and this will provide investors with alternative financing options," Mrs Kilonzo said.

The creation of the SME segment at the bourse aims at loosening stringent listing requirements that have seen many small businesses shy away from tapping into the capital markets.

Currently the NSE has two sectors; the Main Investment Market Segment and Alternative Investment Market Segment whose tough listing requirements have locked out many companies.

Mrs Kilonzo said the introduction of an SME Market would also contribute to the deepening of the country\’s capital markets.

Difficulties in accessing financing has 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.

Along with the introduction of the special market, the government is being urged to develop a National SME Equity Fund.

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Standard Investment Bank Director for Investment Banking Amish Gupta said the fund would provide equity capital to SMEs as an alternative source of finance.

"The government in a desire to grow the economy entered into a credit facility agreement with commercial banks to support SMEs and has so far raised close to Sh3.8 billion. The government should use the same principle and apply it to the equities market," Mr Gupta said.

According to Mr Gupta, investment banks and stockbrokers would manage the fund and raise support capital for every Sh1 provided by the national fund.

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