SME being the backbone of Kenya, will receive a boost by being listed in the Nairobi stock exchange (NSE) market before the end of this year. This means that the SMEs will change from being private owned to being public owned. As a result, its shares will now be traded at the stock market. This is a lift to the sector as it will now access alternative financing options for investment and expansion and moreover improve the image of the company in the public view.
Certain parameters have been put in place for companies wishing to be listed at the NSE. For instance, they are expected to have met the minimum requirement before trading. This includes an asset base of between 20 and 100 Million and a shareholder roll of between 100 and 1000. In addition, the companies should be those that constantly publish their financial reports and disclosures publicly as a public firm. Moreover, they should have been profitable for five years in a row before listing.
Challenges that have been facing the sector are bound to be curbed once the SMEs are listed in the stock exchange. Some of these include dilapidated infrastructure which thus makes it difficult for the transaction of goods and services to take place, low adoption of technology by the sector, poor market access both locally and internationally and harassment from government institutions. In addition, the presence of grey and black market goods has also been a hitch back to the sector. This is due to the low financial standing for SME development.
This makes then them vulnerable to the counterfeit goods as they are usually availed in the market at lower prices than the original commodity.
This is bound to change once the SMEs are listed at the stock exchange. This is because the SMEs being the largest sector of the Kenyan economy will now be in a position to access alternative financial sources which will thus facilitate its activities. Consequently, the Kenyan economy will also receive a boost by virtue of the same as the SMEs constitute about 96% of all business enterprises in the country.