Published on September 1, 2015

Review of Growth Enterprise Market Segment (GEMS) and increasing access to Kenya’s capital market by small and medium enterprises (SMEs)


According to FSD Kenya and World Bank research, credit to small and medium enterprises (SMEs) by the banking industry only constituted 23.4% of total lending in 2013, up from 19.5% in 2009. Interest rates ranged from 15% to 20%. The Growth Enterprise Market Segments (GEMS) was launched in January 2013 by the Nairobi Securities Exchange (NSE) to provide more options for SMEs finance, especially long-term funding. The GEMS provides favorable listing requirements that were tailored for SMEs. GEMS can admit companies that have been in operation for only a year. It does not impose a requirement for having turned a profit, recognizing that most SMEs often have a difficult inception.

This report, commissioned by the NSE and the Capital Markets Authority (CMA), the industry regulator, recommends ways in which the GEMS can be improved to enable even more firms to list, tapping into the deep and diverse pool of investors in Kenya. As of the time of publishing the report in September 2015, GEMS had four listed firms. The NSE plans to increase this to 19 listings by 2017, and as per the Capital Markets Master Plan, that should rise to 39 listings by 2023. Having these number of listings will take bold reforms – many of which are underway – and as the report recommends, taking a pro-active and layered approach by combining a number of demand, supply, market-improving and regulatory measures that will enable GEMS become a complementary source of finance to SMEs, including enabling these firms to increase their profile and visibility.


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