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Capital markets vital for SMME development

Publishing Date : 12 March, 2018


The survival of Small Macro Medium Enterprises (SMME’s) remains important in the country’s economy, hence the need to facilitate for better forms of acquiring capital, Tsametse Mmolai the Head of Listings and Tradings at the Botswana Stock Exchange (BSE) has said.

Speaking at the BSE Listings Conference in Gaborone, Mmolai highlighted that the survival of these enterprises is vital as they are the economy pushers when it comes to creating employment. He emphasized that the most common mistake entrepreneurs share is the inability to explore opportunities put before them.  He further stated that the role corporate governance plays in the survival of the SMME’s is commonly overlooked. He said it lacks in most of these setups.

The BSE Head of Listings and Tradings advised entrepreneurs who would like to maximize capital markets to consider listing in the Tshipidi Board with the Stock Exchange. He explained that the Tshipidi board allows for businesses with at least 5 shareholders and also gives the opportunity to sell at least 5 percent of its shares to the public.

Furthermore he shared that taking a company public reduces the overall cost of capital and gives the company a more solid standing when negotiating interest rates with banks. This, he emphasized, aids in reducing interest costs on existing debt that the company might have.

Mmolai also enlightened the public that the main reason companies decide to go public, is to raise money and help in spreading the risk of ownership among a large group of shareholders.

Listing is important when spreading the risk of ownership, especially when a company grows. Mmolai observed that with the original shareholders wanting to cash in some of their profits while still retaining a percentage of the company spreading risk becomes critical. The BSE Listings and Tradings Head also explained that listing in stock exchanges also facilitates for Brand equity and listing on a stock exchange. He said it affords the company increased credibility with the public, having the company indirectly endorsed through having their stock traded on the exchange.

Mmolai also noted that after realizing that there is need to educate entrepreneurs about the stock market, they have adopted a culture of training with aims of developing entrepreneurs. Also speaking on the survival of the SMME’s, the Managing Director (MD) of Africa Lighthouse Capital, Bame Pule advised entrepreneurs not to leave anything out when operating. He emphasized that the reason why most businesses collapse before takeoff is because many business owners do not take seriously the role of the executives.

“A fully planned for entity requires a fully appointed finance team to function.”  Pule noted that there is need for financial literacy in form of qualified people who can deal with funds and also the need for proper resources at all times as they aid productivity. The lighthouse MD emphasized that the survival of SMME’s remains critical and needs intervention as there is still a lot of work to be done in regards to their fully fledged growth.



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