Small and Medium Enterprises Association of Malawi ( Smea), a grouping of small businesses, has urged the Malawi Stock Exchange (MSE) to engage in sensitisation campaign to clarify issues relating to the Alternative Capital Market (ACM).
The ACM otherwise known as the Alternative Exchange (AltX) offers opportunities to small businesses that cannot list on the main bourse which currently has 13 counters.
Since inception in 2010, there has been no single entity registered on AltX despite the relaxed conditions for listing.
MSE chief executive officer John Kamanga recently said most of the small and medium enterprises (SMEs) do not adhere to corporate governance issues; hence, their failure to list on AltX.
But he said issues of governance, transparency and disposure, which are mandatory listing requirements, are aimed at protecting investors.
Said Kamanga: “Some investors have shown interest to invest on the market but none has listed. We find that most of them are sceptical to come on the market due to issues of control of their entities while others seem to have problems with issues of corporate governance which is key among the listing requirements.”
He said MSE has been engaging SMEs that operating in an environment where there are three conditions—governance, transparency and disposure—is to the advantage of the investor.
But Smea president James Chiutsi in an interview said there is need for the local bourse to engage in sensitisation meetings, adding that most of them are not aware of AltX.
“Sensitisation is one of the major issues hindering SMEs from participating in the AltX market. The problem in Malawi is that there is very little consultation done with stakeholders when initiatives are being rolled out,” he said.
Chiutsi said while AltX can provide cheaper sources of finance than traditional sources, it is like lighting a lamp and covering it with a bucket and no one will enjoy the light.
But he said apart from providing the much-sought finance, the AltX could help SMEs to maintain discipline in the way they manage their operations thus their accounting and record keeping functions.
Chiutsi said the SMEs have a role to play in boosting the performance of the stock market.
“The SMEs environment in Malawi is volatile and prohibitive. Availability of funds is obviously crucial, but before that we need other business developmental services to help SMEs develop new quality products,” he said.
Speaking earlier, Reserve Bank of Malawi (RBM) Governor Charles Chuka said MSE remains one of the smallest markets in the Southern Africa Development Community (Sadc) region. n