MSMEs support call for micro stock market
WIGNALL…if we look at the example of the junior stock exchange and the number of companies that have gone public, and the improvement in corporate governance in those companies, that would really bode well for micro- companies, in particular, for the purpose of formalization (Photo: Joseph Wellington)
Associations that run local micro, small and medium-sized enterprises (MSMEs) said they fully support the creation of a micromarket at the local stock exchange.
“With all the funding challenges we are currently facing, I think this is a great idea. The idea that Minister Shaw backed when he was head of the department is still relevant but, for a some reason, hasn’t taken hold,” said Donovan Wignall, Chairman of the MSME Alliance – a network of business organizations that represents more than 300,000 MSMEs locally.
Speaking at last month’s edition of Jamaica Observer Business ForumWignall said that while much discussion has been and is still taking place at the broader private sector level, the respective groups, comprising his organization as well as the efforts of the Small Business Association of Jamaica (SBAJ) and the Young Entrepreneurs Association (YEA), among other bodies, would move quickly to begin discussions with Marlene Street Forrest, managing director of the Jamaica Stock Exchange (JSE).
“Through these discussions, we will see how we can run the program of a micro exchange. We can set a limit of probably $50-100 million as a ceiling for the initial public offering (IPO) for micro businesses, but I believe it’s a great idea worth pursuing,” he said.
“If we look at the example of the junior stock market and the number of companies that have gone public, and the improvement in corporate governance in those companies, that would really bode well for micro-enterprises, in particular for formalization purposes,” Wignall added.
Following the creation of a junior market in 2009, which to date accounts for almost half of the more than 100 securities now listed on the JSE, a micro-exchange is expected to allow small businesses with revenues below 15 million dollars to raise capital to start business growth.
The junior market already allows fully registered and legitimate SMEs to raise between $50 million and $500 million in new funds in an IPO. Incentives including full exemption from income tax for the first five years and 50 percent for the remaining five years are also applied.
YEA Chairman Cordell Williams Graham, also giving his full support to the development of a micro-market, said that apart from formalization and corporate governance structures, the creation of such a market will allow small business players to benefit from diversified funding.
“I think it’s also a good decision, which gives a significant boost to formality because of the requirements,” she told the forum.
Minister Audley Shaw, a long-time advocate of the need for a micromarket and instrumental in the creation of the junior market, recently stressed at a JSE listing ceremony the need for action definitive ways to get things started, noting that a micro fellowship “will present another opportunity for more businesses to go formal.”
Shaw had also said in its previous proposals that a micro-exchange would target companies with capitalization between $5 million and $50 million as they seek funding to support growth and expansion.
“I will champion him and promote him in cabinet to the prime minister and finance minister,” he said.
WILLIAMS GRAHAM… I think it’s also a good decision, which gives a significant boost to formality due to the demands (Photos: Naphtali Junior)