Tanzania: Enterprise Growth Market Cap Reaches 120 Billion/-

Posted on :Wednesday , 7th September 2016

Enterprise Growth Market (EGM), Dar es Salaam Stock Exchange second window, has proved to be a catalyst for growth.

The alternative offers opportunities for small and medium-sized companies, total market capitalisation reached 120bn/- at the end of last month.

DSE Chief Executive Officer Moremi Marwa said in Dar es Salaam yesterday that the alternative market offers opportunities for SMEs to migrate from their current status into more sizeable corporate.

"EGM is often considered the lesser of the two trading platforms [other Main Investment Market]... however, if one dwells into it a bit deeper will come to learn that this statement, is a myth," Mr Marwa said.

The CEO urged EGM should equally be seriously considered as a tool for new ventures, small and medium-sized local and foreign businesses to raise capital, attract investors--including institutional -- as they grow and gain their exposure. So far five companies are listed on EGM.

"... Liquidity is a necessary ingredient for listed companies, and it does not matter whether the listing is in the MIM or EGM," Mr Marwa said.

The fact is that many, said Mr Marwa, practically or in perception do define the stock market in the context of either an instrument for relatively big corporate entities or an investment vehicle for rich-educated individuals.

The other common misconception around these small-cap companies listed in the EGM, has been around the argument that institutional investors should not invest in them.

"... Unfortunately there is specific investment guidelines by some institutional investors that prohibit these institutions from investing in start-up-small cap companies listed in the EGM. "I guess the assumption here is that these companies are more risky and that corporate governance is of sub-standard," He said.

However, sometimes EGM listed companies have superior corporate governance and risk management practices compared to companies on main board. One of the key requirements for companies to list their shares in the EGM is needed to register a designated advisor--called Nominated Advisor.

EGM was established some three years ago and so far five firms are listed namely, Yetu Microfinance Bank, Maendeleo Bank, Mkombozi Bank, Swala Energy, and Mufindi Community Bank.

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