An exclusive stock market for small and medium-sized enterprises with flexible listing rules could be in place in Kenya by January next year.
The proposed stock market is expected to open access to capital for the SME sector, raising savings and investments through additional listings.
Speaking when she opened a forum to discuss the proposed market in Nairobi on Wednesday, Capital Markets Authority chief executive Stella Kilonzo cited difficulties in accessing funding as one of the challenges facing SMEs.
“Access to funding and high cost of finance through the traditional channels have been major constraints to SMEs hence the need to explore alternatives,” she said.
She added: “The introduction of an SME market is in line with the government focus on the SME sector as one of the key drivers of the Vision 2030 economic blueprint which play an effective role in economic growth”
In Kenya, she said SMEs are responsible for about 80 per cent of employment and contributes 40 per cent of the gross domestic product, making them an integral part of the country’s economy.
Ms Kilonzo asked participants at the forum to share ideas with a view to amending the existing laws to support further development of the capital market.
Some of the proposals for the new stock market include lower listing and trading fees, with considerations to be made on how the fees are to be reduced within the sector. A new process for listing and offering will also be factored in.
A new regulatory environment will be determined, with amendments to the regulatory framework to allow SMEs raise capital in an environment specifically designed for their needs.
The CMA chief executive also asked stakeholders to consider issues on whether to attract both individual and institutional investors to the market so as have diverse shareholders.