The Influence of Ibuka program in promoting listing to the growth enterprise market segment (GEMS) at the Nairobi Securities Exchange
Date
2022
Authors
Wanyangi, Peter Kamau
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
The general objective of this study was to determine the influence of Ibuka program in promoting listing to the Growth Enterprise Market Segment (GEMS) at the Nairobi Securities Exchange. This study came at a high time when the Nairobi bourse was experiencing slow and few listings at GEMS – a segment established to attract a pool of small and medium enterprises to list with favorable and less-stringent regulations for the SMEs to tap the advantages of the capital markets. GEMS registered only six listings since its inception in January 2013. The Ibuka incubator and accelerator platform, launched in December 2018 was later established as a non-listing hosting board housed at the Nairobi Securities Exchange to enhance visibility, brand recognition, and enhance the corporate structure of small and medium enterprises. Ibuka, moreover, was leveraged by the NSE to nurture and prepare non-listed SMEs under their wings to potentially list at the Nairobi Securities Exchange, more intentionally graduate to GEMS where they would get access to favorable eligibility requirements. The study sought to establish the Ibuka strategy on creating a pipeline for more listing to GEMS especially after one of the Ibuka hosted firms, HomeBoyz Entertainment migrated to GEMS in 2020. The research proposal adopted agency cost theory and pecking order theory to explain the slow listing experienced at GEMS by SMEs who fear losing control of their entity and choose other means such as internal financing and low-cost debt to finance their operations with equity as a last resort. The diffusion of innovation theory illustrated the theoretical framework on the influence the Ibuka program could have on nurturing and spreading information of GEMS through a nest such as Ibuka with both programs under the roof of the NSE. Primary data was collected using a semi-structured questionnaire amongst 28 hosted firms at Ibuka with a response rate of 35.71%. The questionnaire sought to address the researcher’s specific objectives investigated in the study, that is the influence of Ibuka program in promoting awareness of the listing requirements and benefits that SMEs stand to gain when they list to GEMS; the influence of Ibuka program in promoting the training of hosted firms for a prospective GEMS listing and the influence of Ibuka program in inculcating best corporate governance requirements to hosted entities to make them ready to potentially list to GEMS. Descriptive quantitative data from each item of the questionnaire were analyzed using Microsoft Excel Software to determine percentages and data reported in tables, graphs, pie charts, and percentages. The study found out that Ibuka program had a great influence on awareness of GEMS. There was, however, limited information amongst the hostees on the eligibility requirements and benefits of GEMS as well as corporate governance requirements. The majority of the firms showed interest to list at GEMS, however, the agency cost problem was found to be a critical factor that could be an obstacle to listings. Hosting introducers were found to be very influential parties for creating awareness of the GEM segment at Ibuka. The low responses during data collection were a huge limitation in the research.
Description
A Research Project Submitted in partial fulfillment of the requirements for the Degree of Bachelor of Commerce at Strathmore University