The EastAfrican: Nairobi bourse fails to attract small firms
Nairobi Securities Exchange Chairman Kiprono Kittony (L) confers NSE Chief Executive Officer Geoffrey Odundo during the launch of the ESG Report 2021 by Kakuzi Limited at the NSE in Nairobi, Kenya on December 20, 2022. PHOTO | FRANCIS NDERITU | NMG
The Nairobi Securities Exchange (NSE) is facing dimming prospects of small and medium-sized enterprises (SMEs) listing on the bourse after the struggling Kurwitu Ventures applied for delisting, just four years after another firm, Atlas Development Services, collapsed and was delisted by the regulator.
The NSE launched the Growth Enterprise Market Segment (Gems) for SMEs about 10 years ago to allow smaller companies list shares for visibility and price discovery.
However, the trading platform has only attracted six companies in 10 years, signalling the extent of financial constraints facing the stock market as a result of a poorly performing economy and the bear run on the market.
These are Home Afrika Ltd, Flame Tree Holdings, Kurwitu Ventures Ltd, Nairobi Business Ventures, Atlas Development & Support Services and Home Boyz Entertainment
Investors are also jittery about putting money in small companies as governance and financial challenges rocked several listed firms.
“Most companies list when they are raising money but with the Gems, you got listed and then you raise money later when you qualify and that is what we need to change,” said Shamiah.
“We require confidence where people can believe that even when they invest in smaller companies they can still get returns just like in big companies. Secondly, changing the legal framework to allow these companies raise money while listing.”