By JAMES ANYANZWA

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Kenya’s bid to have small and medium-sized enterprises raise fresh capital through the Nairobi Securities Exchange faces new hurdles over diminishing investor interest, declining stock prices, the poor performance of existing listed firms and the Covid-19 pandemic.

The EastAfrican has learnt that the NSE has not attracted a single company in close to a decade and is also struggling to attract companies to its incubation programme, which is designed to prepare potential issuers to raise capital through the exchange.

The programme dubbed ‘Ibuka’ was launched in December 2018 through a partnership between the NSE and the Kenya Association of Stockbrokers and Investment Banks (Kasib) to help selected Kenyan companies fast-track their development process by accessing financial advisers and consultants to help them structure their businesses, enhance visibility and get exposure to local and international investors.

NEW ENROLLMENT

So far 24 firms have enrolled to the programme. However, over the past three months, new enrolment has stalled over the Covid-19 pandemic, which has negatively affected the financial positions of several firms through declining sales and productivity.

“These companies have made good progress but Covid-19 has slowed everything down,” said Geoffrey Odundo, the bourse’s chief executive.

Paul Mwai, Kasib chairman said several firms that had wished to join the programme are on a wait-and-see due to the pandemic. “Some companies say they want some time to review their positions and we will still revisit these plans with some of them to see if they are still interested in listing,” said Mr Mwai, adding that Ibuka is not a panacea to the initial public offering drought at the NSE.

Financial services firm Britam was the last corporate entity to issues shares to the public through the NSE. It was seeking to raise Ksh5.85 billion ($58.5 million) but only managed to get Ksh3.5 billion ($35 million)— 40 per cent under subscription. That was in August 2011.

“The programme creates a good pipeline of companies that have the potential of listing in future,” said Mr Mwai, who is also the chief executive of AIB Capital. Out of the 24 companies that have joined the programme only one undisclosed firm has expressed interest in floating an IPO.

“I know of one company that was on the verge of listing before Covid-19,” said Mr Mwai.

During the quarter (January-March) the NSE 20-Share Index fell by 20.7 per cent, with notable decline in prices of listed stocks in the tourism, transport, manufacturing and agricultural sectors. Market capitalisation during the period declined by 21 per cent to Ksh2.02 trillion ($20.2 billion), according to data from the Capital Markets Authority.

Ibuka is an incubation and acceleration programme designed for companies seeking high growth prospects.