DSE alternative window registers slow progress

DAILY NEWS Reporter

FOUR enterprises have raised 46bn/- through Dar es Salaam Stock Exchange alternative Market Enterprise Growth Market. The firms, three banks and oil and gas exploration company, managed to raise the fund in the span of less than three years.

DSE Chief Executive Officer Mr Moremi Marwa said the EGM also doubled the number of retail investors from 250,000 to 450,000.

“Though the market faces a number of challenges, it has registered some remarkable achievements compared to the main market,” Mr Marwa told participants of a half-day EGM seminar The main market in its first four years managed to list two firms compared to four and the fifth next month.

Nevertheless, the EGM trade turnover is 160m/- a year, which equals 0.1 per cent of total bourse liquidity per year.

DSE total turnover is some 800bn/- per year. The CEO said alternative market awareness “is still low” on what EGM and the exchange, in whole, would do to the growth of the economy and society. For instance, Maendeleo Bank raised 4.5bn/-, Swala Oil and Gas 6.6bn/-, Mkombozi Bank 3.7bn/-, and Mwalimu 30.9bn/- and Yetu Microfinance Bank 3.1bn/-.

Open University Senior Lecturer Dr Abdiel Abayo said when the market was launched the reception was ‘fantastic’. “It was thought that through this innovation, micro, small and medium companies would be able to raise substantial initial and on-going capital... “But it was instead shrouded with challenges to register slow growth,” Dr Abayo said during the seminar.

The lecturer listed the challenges as limited managerial skills for transforming the companies into properly governed entities and limited capacity of licensed nominated advisors to transform the institution.

Others in families are reluctant to lose ownership, most small companies are not aware of the opportunities, procedures as well as relaxed requirements at the EGM. “Among the top 100 of SMEs, some are aware of the access to finance opportunities availed by this market.

However, they do not consider this to be a viable option,” Dr Abayo said. According to research findings of Dr Abayo, EGM is not SMEs option since some owners of these companies do not appreciate the necessity of allowing ‘nomads’ to sit in their boards of directors.

Also some SMEs fear transparency requirements of the market as some are keeping several sets of books of accounts. The idea behind the establishment of EGM is to unlock financial constraints that small businesses are facing given the fact that some 70 per cent of them have no easy access to finance.