East African capital markets advisory centre to boost SMEs

Friday March 17 2017

The Nairobi Securities Exchange. PHOTO | FILE

Four years since GEMS was launched at the Nairobi Securities Exchange, it has attracted only six companies. PHOTO | FILE 

By KABONA ESIARA

The East African Securities Regulatory Authority plans to set up a Capital Markets Advisory Centre to help small and medium enterprises use capital markets to create more jobs and spur economic growth in the region.

Capital markets regulators from Uganda, Kenya, Rwanda, Tanzania and Burundi’s central bank mooted the Capital Markets Advisory Centre (CMAC) during a consultative meeting in Nairobi on March 6.

East African bourses — the Dar es Salaam Stock Exchange, Nairobi Securities Exchange, Uganda Securities Exchange and Rwanda Stock Exchange — created the Growth Enterprise Segment (Gems).

“The decision to set up CMAC was made in the recognition that SMEs need to be supported to access alternative forms of long term capital, thereby reducing their dependence on short-term bank financing,” said Robert Mathu, executive director of the Capital Market Authority of Rwanda.

The centre is expected to provide pre-listing and post-listing support to SMEs.

EASRA was tasked to mobilise resources at a regional level to support capacity clinics for small and medium enterprises to tap into long-term financing through capital markets.

A communique from EASRA says CMAC will providing technical support to SMEs with a view to providing credible pipeline to access private and public market based finance.

The regulators also deliberated on full implementation of risk-based supervision and regional capacity building programmes through partnership with the Chartered Institute for Securities and Investment to ensure certification.

Mr Mathu said most SMEs in the region still cannot afford technical services like legal and corporate restructuring even as regional regulators eased of disclosure requirements.

The minimum governance demands during and after listing have also been cited as barriers for SMEs.

“At the minimum, a business must have at least one independent director and also produce audited financial reports,” said Mr Mathu.