Remarks by Mr. Paul Muthaura Ag. Chief Executive, Capital Markets Authority, during the launch of the Growth Enterprise Market Segment on the Nairobi Securities Exchange on January 22, 2013

  •  The chief Guest Mr. Mugo Kibati the Director General of Vision 2030 Delivery Secretariat;
  • The Chief Executive of the Nairobi Stock Exchange, Mr Peter Mwangi;
  • The Chief Executive, and representatives of Market Intermediaries Present;
  • Members of the fourth Estate
  • Distinguished Guests;
  • Ladies and Gentlemen;
  • All protocols observed: 

Today marks yet another milestone in the Growth and Transformation of our capital market as we launch the Growth Enterprise Market Segment (GEMS). This is one of the many steps we are charting to bring to fruition our vision of making Nairobi the gateway to the Africa’s capital markets. 

Indeed it gives me great pleasure to be here this morning to launch this Market Segment which is geared at supporting mid-cap companies’ strategic aspirations by providing them with access to risk capital through the capital markets. Through this market, these firms will be able to raise substantial initial and ongoing capital, whilst also benefiting from increased profile and liquidity, within a regulatory environment designed specifically to meet their needs. 

Ladies and Gentlemen; I am pleased to note that the journey towards the development of this market has been one of collaboration between the Nairobi Securities Exchange, the Central Depository and Settlement Corporation, the Authority, and other stakeholders. Indeed this is a perfect case of how much we can achieve together if we channel our efforts optimally towards a common purpose. I wish to particularly recognize the effort of the technical team from the three institutions for working tirelessly in putting this market structure together. 

Ladies and Gentlemen; the contribution of Small and Medium Enterprises (SMEs) in the economic growth of both developed and developing countries cannot be overstressed. In Kenya for instance, SME operations cut across almost all sectors of the economy and sustain the majority of households. According to the Economic Survey 2010, SMEs account for about 80% of the country's total employment outside small-scale agriculture and contribute to about 40% of GDP.

This notwithstanding, SMEs operate under a myriad of constraints including those of inadequate infrastructural facilities, high rate of enterprise mortality; low level of entrepreneurial skills; lack of a conducive operating environment; restricted market access and cumbersome regulatory requirements. It is however the issue of access to finance that remains the most inimical to their survival. They not only find it difficult to access finance, but also have to deal with the higher cost of finance relative to the charges larger firms face. Indeed, access to finance has been mentioned variously as the second most important constraint to doing business after inadequate infrastructure. 

Similarly, securities exchanges in emerging economies continue to lament over the limited scope of investment products and inadequate investor demand. Although, locally we have recently seen a number of listings by introduction, the number of companies seeking to come to market significantly falls short of the levels necessary to drive transformative change in the country. 

The Growth Enterprise Market Segment we are launching today will not only be expected to unlock capital for a large number of these SMEs but also raise the level of savings and investments within the capital markets through additional listings. Indeed the introduction of an SME Market is in line with the Government focus on the Small and Medium Sized Enterprises sector as one of the key drivers of Vision 2030, destined to play an effective role as an engine for economic growth, poverty eradication, and employment creation. It is expected that it will augment various initiatives by both the Government and the private sector to deal with the challenges facing SMEs and to create enabling business environment to encourage growth of an SMEs sector that has strong linkages with major industries. 

The regulatory framework for listing of SMEs at the NSE was gazetted into law in June 2012, and all other documents detailing the listing procedure and disclosure standards to be applied have also been approved in order to operationalize this segment. This heralds a market with lower eligibility standards to facilitate access but that ensures the maintenance of high disclosure standards to ensure investors will have all the information they need to make informed decisions. 

The entities listing on GEMS will require no track record on profitability for eligibility and thus the framework offers a critical listing opportunity highly promising start-up firms including those involved in mining and other companies investing heavily in infrastructure based projects that require a heavy capital outlay and do not have a profit history. The resultant vertical and horizontal linkages will have the multiplier effect of general economic development. It also reduces competition for angel and venture capital funds with a general effect of increasing access to capital for SMEs. 

This segment is built around a new class of market intermediaries called Nominated Advisors. These duly vetted and approved corporate finance specialist will be responsible for overseeing compliance of the company with all their listing and continuing obligations. This is intended to reduce the costs associated with building up internal capacity for listing compliance prior to a company coming to market, thereby reducing the operation costs and encouraging wider participation of SMEs. 

We at the Authority are therefore positive that this bold step will bring on board various issuers and with them investors who previously did not consider the securities market as a destination for their funds. 

I congratulate the Management and Staff of Nairobi Securities Exchange as well as other stakeholders in the market who supported this initiative. Your professionalism and dedication towards this cause is to be admired and we look forward to further partnering with you on other capital market initiatives.

Thank you

Sign up for our Newsletter today

Contact Us

Embankment Plaza, 3rd Floor
Longonot Road, off Kilimanjaro Avenue, Upperhill
P.O Box 74800-00200, Nairobi Kenya
Tel: +254 20 2264400/ 2264900/ 2221910/ 2221869
Backup Wireless Lines: 0722 207767/ 020 2611464
Cell: +254 722 207767, Email:
Copyright © 2020 Capital Markets Authority, 2018 ISO 9001:2015 Certified. All Rights Reserved.
Joomla! is Free Software released under the GNU General Public License.