An Assessment of the Effectiveness of the Enterprise Growth Market (EGM) as an Alternative Capital Market in Tanzania, A Case of Selected Companies

Abstract

The two main obstacles to Tanzanian growth, according to the 2010 Micro, Small, and Medium Enterprises (MSME) Survey Report, are a lack of operating capital and restricted access to financial markets. The Capital Markets and Securities Authority (CMSA) conducted a study to address the financing issues faced by Tanzanian SMEs. The report proposed the creation of an EGM market sector at the Dar es Salaam Stock Exchange (DSE) to meet the capital-raising needs of SMEs. It is therefore the purpose of this study was to establish the effectiveness of the Enterprise Growth Market Segment as an alternative capital market in Tanzania. The study used quantitative study techniques. The population of the study included medium enterprises that have the potential to enlist in the EGM. The sample size is 150 respondents and only 142 responded. The researcher used both primary and secondary data. The study has revealed that the EGM is relevant for the growth of the country’s economy through the empowerment of the SME industry in Tanzania as it provides an alternative source of capital. However, the findings have revealed that the intended enterprises are still reluctant to use the window as they lack information, knowledge and difficult terms and conditions. The listed companies on the EGMs have performed fairly well in their IPO. It is therefore suggested that the DSE should do more sensitization concerning the window.