SME Listings at East African Bourses

SMEs
Small and Medium Enterprises play a vital role in any emerging economy. In Kenya the emergence of microfinance banking has catapulted the growth of SMEs.

East African Exchanges
NSE, DSE and USE collectively the East AfricanExchanges have plans to allow the listing of SMEs through relaxation of the stringent listing requirements that characterise these marts. The tough floatation rules have hindered most SMEs from floation their shares through IPOs.

SME Listings
The listing of small and medium-sized enterprises (SME) is expected to provide more shares at the market, allowing investors to diversify their investments and help spread liquidity, which has at times distorted the valuation of some shares.The development, which will also be replicated by Kampala and Dar-es-Salaam bourses, will catapult the region into the same level with developed and middle level economies which allow listing for SMEs as a way of enhancing their contribution to the economic growth.

Regional Bourses Agree
The opening up of the regional bourses to SMEs by late 2008 was agreed on by the Kenya, Uganda and Tanzania heads of stock exchanges at the East African Securities Exchange Association (EASEA) meeting held in Kampala on September 7. This will spur the trading in the yer to be established over the counter market at these stock exchanges.

Mass Cross Listing in the Offing

11 Firms:

After my earlier posts on cross border listing (see Below), it is now emerging that eleven (11) firms have approached the regulators to cross list on the East African bourses. It is noteworthy however that although the regulators have been trying to level the playing ground, alot of issues still need to be addressed before companies join in this bandwagon.

East African Exchange:

With the establishment of an East African Exchange (EAE) also in the offing, the eleven companies are said to be as follows: Kenya with 5, 3 fromUganda and 3 from Tanzania.

Pioneers:

Earlier the Kenyan companies that had taken the cue to pursue cross border listing include East African Breweries (EABL), Kenya Airways (KQ) and Jubilee Insurance.

Listed Companies:

Among the east African players, Kenya still leads the pack with 53 firms and the number is expected to rise with the listing of Kenya Re,Safaricom and others soon to come. Der es salaam and Uganda Exchanges follows in the number of listed firms with only 7 and 6 respectively. This is excluding the Kenyan firms (EABL, KQ and JHL) that have poineered to cros list in the exchanges.

New Incentives:

The regulators have put in place alot of niceties for companies striving to cross list which include:

-Issuing a summarised Information Memorandum.

-No requirement of reporting accountant’s report.

-An abridged financial statements for the last five (5) years is acceptable.

-Provision of the latest annual or interim accounts submitted to the home exchange would be accepted as the latest financial statements.

-Standard initial fee of US$5,000 (Sh360,000) against previous amounts of US$21,126 (Sh1.5 million) to cross list its securities across Kenya and Uganda.

-However, only companies listed in the Main Investment Market Segment (MIMS) of both bourses will be eligible for cross listing. (Business daily)

Nonetheless, more still needs to be done to make the East African Integration a reality in all aspects then we can proudly talk about an Economic Integration, Political Integration and finally adopting a one currency for the East African Union.