17 December 2012

Zimbabwe: ZSE Pushes for Separate SMEs Bourse

THE Zimbabwe Stock Exchange is pushing for the urgent establishment of a small-to-medium enterprises bourse to provide easier access to capital markets to raise funds to support SME growth.

The ZSE said it had noted that SMEs were fast growing businesses that played a significant role in economic growth and employment.

One major challenge of the SMEs was funding, as they did not qualify to be listed on the ZSE, on its current listing rules.

In a statement, ZSE chairperson Mrs Eve Gadzikwa said the bourse was aware of the increasing role of SMEs in other emerging markets in Zimbabwe and the region.

She said the ZSE would work with the SME associations to educate members and develop a framework transparently with the input of all stakeholders and regulators.

"The framework will spell out the rules that apply to SMEs and measures taken to minimise costs to the SMEs, without creating additional risks to the investor.

"Although the requirements of the SMEs will compete for attention with a number of high priority issues already on the table, ZSE must, regardless of that, proceed and put the framework in place now," she said.

Mrs Gadzikwa noted that listing would make merger schemes appeal to sellers when the shares they receive are listed on the ZSE and are thus marketable.

This would also mean that SMEs were regulated and could compete on the global market and also provide mentorship opportunities during the growth phase of the business due to a change in the composition of the board.

"Unlike getting a loan from a financial institution, a pure equity listing has no interest burden and no repayment period. During difficult times the SME is not exposed to variable interest rates from debt," Mrs Gadzikwa said.

She said the number of SMEs listed would depend on the sector's capability to meet the listing requirements and attract interest from informed investors.

She noted that listing SMEs would mean that current and potential investors can check the value of their investment daily by referring to the price list of quoted companies. SMEs have not been able to qualify for listing based on the current listing rules.

The SME Exchange will have its own set of listing rules. "Generally, it is appreciated that SMEs are at a different stage of growth in the business cycle and may face unique challenges that are different from the average company listed on the ZSE," she said.

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