The Chamber for Small and Medium Enterprises Association (CSMEA) says most small and medium enterprises (SMEs) fall short on the eligibility criteria to list on the local bourse.
CSMEA executive secretary James Chiutsi told Business News on Tuesday that most SMEs have a lot of internal issues on governance and performance to address than thinking of listing on the Malawi Stock Exchange (MSE).
He said: “Most SMEs fall short on the eligibility criteria like the need for audited accounts. SMEs would require minimum compliance standards and costs in order to be registered on the stock exchange, if they are there, then they are not publicised.
“The SME sector really needs inflow of equity capital for example but players in the sector aren’t assured of this. Also amongst SMEs, there’s little awareness on the benefits of registering on the MSE.”
In order to accommodate more businesses and improve accessibility to the exchange, the Malawi Stock exchange introduced the Alternative Capital Market Board in 2007.
The board was introduced to cater for small and medium sized companies who would like to raise capital at a lower cost by accessing public funds.
MSE chief executive officer John Kamanga observed in the MSE magazine issue number 4 that most of the SMEs have corporate governance problems especially in the area of transparency, disclosure and myth of losing control.
He said: “The fact of the matter is that when a company lists on our Alternative Capital Market, the percentage to be offered to the public is 20 percent which is spread to a minimum of 100 people and the 80 percent remains with the existing shareholder. You can clearly see that control is not lost by going public.
“We are, however, engaging potential medium enterprises to utilise the exchange as a source of raising capital and very soon we, will rebrand the name to reflect the objective of the creation of this platform for the SME sector.”
MSE opened its doors in 1994 but started equity trading in November 1996 when it first listed National Insurance Company Limited (Nico).