NSE’s Ibuka nets 22 firms in 2019

Nairobi Securities Exchange’s incubation programme, dubbed Ibuka, took off last year and registered an average of nearly two companies every month during the year. FILE PHOTO | NMG 

By GEOFFREY IRUNGU
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Summary

• Nairobi Securities Exchange’s incubation programme, dubbed Ibuka, took off last year and registered an average of nearly two companies every month during the year.
• The initiative, intended to prepare companies for listing on the main board of the bourse, started with APT Commodities, a tea exporting firm.
• The latest company to be registered during the year was Mookah Africa, an online ticketing platform, becoming the 22nd member of the programme at the beginning of December.

Nairobi Securities Exchange’s incubation programme, dubbed Ibuka, took off last year and registered an average of nearly two companies every month during the year.

The initiative, intended to prepare companies for listing on the main board of the bourse, started with APT Commodities, a tea exporting firm.

The latest company to be registered during the year was Mookah Africa, an online ticketing platform, becoming the 22nd member of the programme at the beginning of December.

The Ibuka programme was launched in December 2018 but did not incubate its first company until the end of January 2019. The NSE introduced the programme intending to grow the visibility, brand recognition and business opportunities among hosted companies.

The initiative is also intended to assist in inculcating improved corporate standards, develop capabilities to access capital markets as well as provide a roadmap to long-term corporate sustainability.

It was launched against the background that many small and medium enterprises (SMEs) — despite being the largest employers — experience difficulties attracting financing for expansion due to risk-aversion among potential financiers.

As a result, SMEs have been unable to grow or even qualify to meet the onerous requirements for listing on the NSE.

The situation worsened after the tightening of regulations in the aftermath of the global financial crisis and the capping of interest rates in late 2016.

eligibility criteria

The listing efforts also dropped after several small firms listed on the Growth and Enterprise Market Segment (GEMS) lost their way, exposing investors to losses.

Whereas the regulators had attempted to reduce the eligibility criteria for the GEMS relative to those for the main market segment, many SMEs still could not meet the lower threshold.

The NSE said the major attraction for companies entering the Ibuka programme was that they did not have to meet listing requirements but were ready to start working on meeting them while getting the visibility and capital market access consultancy services that were otherwise available for listed companies.

Under Ibuka, a company is admitted to the incubator board and then progress to the accelerator board, under which it can raise money. Eventually, such a company could qualify to list on the bourse, although it is still free to drop out before doing so.