Enterprise Growth Market

Abstract

Despite the efforts of the Government of Tanzania to promote the listing of SMEs on DSE through EGM, the number of listed SMEs is extremely low. In more than 3 million, only six (6) SMEs are currently listed on DSE via the EGM, which accounts for only 0.0002%. Developing on this background, the study investigated the listing of SMEs on Enterprise Growth Market on Dar es Salaam Stock Exchange, a case of SMEs in Moshi Municipality. The study pursued three specific objectives; to assess the level of awareness about the enterprise growth market among small enterprise segments; to assess the listing potential of SMEs on EGM; and to examine the influence of listing antecedent factors on intention to list through EGM. Through a cross-sectional research design, data was collected from 323 SMEs in Moshi Municipality using a survey questionnaire. Ordinal logistic regression model was used in inferential data analysis. The study revealed that SMEs in Moshi Municipality had a very low level of awareness about the EGM platform and significantly needed to develop their potential to list on it. The study also found listing regulations particularly listing and issuance fee significantly and negatively affect SMEs listing on EGM (-0.342, Wald χ2 (1) = 6.246, p = 0.012). Fear of losing ownership by SMEs owners was also found to significantly predict the EGM listing on inclusion of non-executive directors (-0.403, Wald χ2 (1) = 9.164, p = 0.002) and minimum number of shareholders (-0.674, Wald χ2 (1) = 31.143, p = 0.000). Retained earnings as an alternative source of capital was found to increase rather than decrease EGM listing (0.643, Wald χ2 (1) = 8.742, p = 0.003). Therefore, the study concluded that SMEs in Moshi Municipality are not aware of EGM and as a result, lack the potential to list on EGM, contributing to generally low listing of SMEs on EGM across the country. The study recommended that DSE and CMSA should conduct SMEs awareness campaigns and forums in all regions across the country including Moshi Municipality. There is also a need for the government to review and relax the listing regulations on EGM to make them attainable. The findings of this study, while confirming the assertions of pecking order theory, reveals that other factors both internal and external besides information asymmetry lead to organisation preferring internal over external financing.