Lyft and Uber, the US digital ride hailing cabs, recently filed their papers to list on the stock exchange. It’s interesting to note that both of these companies have been making losses. So it’s not the allure of immediate dividends that will send investors to the counter. Rather it’s the vision, and the intrinsic value of these companies.
Locally, there has been a listing drought on the Nairobi Securities Exchange (NSE) for quite some time . This has not been due to lack of suitable candidates. Our economy is vibrant and has many SMEs. For more than ten years now we have been having the Top 100 survey for local SMEs. Companies that pass the Sh1 billion mark graduate to Club 101.
They join hundreds of others who form an important part of the economy but for various reasons don’t list.
Some are family-owned, while others are private companies, but they all have something in common: profitable, professionally run and value creators in our country.
The Nairobi Securities Exchange (NSE) must do its part to attract companies to list. And of late it’s doing a good job with accelerators, incubation and advertising among others.
But also there are many reasons for your company to list on the NSE. First it’s a step towards natural progression and growth. It’s truly satisfying to start a business single handedly or in partnership with others. Then watch it grow slowly but surely to create jobs and boost the economy. Second, listing boosts governance. (Granted some in the NSE have had issues but they are the exception not the rule. And the authorities seem to be cracking the whip and taking such breaches seriously). Private companies have stringent rules that govern their operations. Listing will only increase compliance as it becomes compulsory and accountable.
Where the rules are weak e.g. hr., board composition, listing comes in handy. Since partial listing is accepted, listing does not mean that you relinquish control.
We have seen listed companies invite strategic investors as partners and generally go on with their lives. Listing does not tie you down. Rather it places your firm on a sure footing, with the proper controls, freeing it to soar high. Listing also brings into the public arena how the economy is doing. There is a disconnect between economic growth and companies’ performance eg profit warnings while say GDP is up. Maybe the non-listed companies are also suffering, but without such data, they will only cry in private.
Separately, trade lobby groups have had better results negotiating with the government in part due to data available publicly. Listed companies shed the most light on say the effects of unfair importation or interest rates review.
The current listed companies could also do with your addition. For instance: Kenya is an agricultural company, but only five are listed.
Many of us grew up in farms, you know. There is almost no listed road builder, almost. Let the service companies that make our economy resilient to global commodity prices crash, arise.
Having more companies listed would also give investors more variety. And hopefully increase local investors’ participation which is critical for the bourse stability, just like domestic tourism. The NSE activities are currently dominated by foreign actors, who are prone to flight at the slightest shock.
Finally, many family and private businesses face challenges upon the demise of their founders. Listing could ensure continuity and cement your legacy. Kudos to the many businesses making the positive step towards listing.
Kariuki Gathuitu, Nairobi.