By Nkiruka Nnorom
THE African Securities Exchanges Association, ASEA’s working group has identified high cost of listing and poor corporate governance as part of the factors hindering Small and Medium Enterprises, SMEs, from listing on African Exchanges.
The group known as the ASEA SME Facilitation Working Group, formed to establish the efficacy of financing of SMEs across African capital markets, also identified lack of access to finance and mentorship as part of the challenges.
The ASEA working group conducted a survey of 28 ASEA member exchanges to determine the fundamental issues experienced by African SMEs in accessing finance, as well as opportunities available for these SMEs to raise capital on exchanges.
Following the survey results, the working group developed a report on the Capital Raising Opportunities for SMEs on Stock Exchanges in Africa, which is a consolidation of survey responses of the 15 ASEA member exchanges that responded.
Ms. Zeona Jacobs, Chairperson, ASEA Working Group, explained that while 19 exchanges have SME platforms, the survey revealed that most of the SMEs are not aware of exchanges as an alternative to raising finance.
She said that the key challenging factors identified in the survey were access to finance (37%), followed by corporate governance and marketing (18%). She added that some of the other issues identified included costs of listing; which relates to continuing obligations for SMEs; and corporatising of business.
“Lack of adequate access to finance is considered as one of the major obstacles and constraints to the growth of SMEs. The results reveal the gap that exists for exchanges to play a role in readying SMEs to list. These include; providing mentorship, road shows to create awareness and to provide information and training at various touch points in the ecosystem,” said Jacobs.