Academy of Entrepreneurship Journal (Print ISSN: 1087-9595; Online ISSN: 1528-2686)


Challenges of Financing Small and Medium Enterprises Growth Through Public Equity in South Africa

Author(s): Lebogang Semenya and Shepherd Dhliwayo

The article establishes why small and medium enterprises (SMEs) are not listing on the Johannesburg Stock Exchange to raise the much-needed capital to grow. Financing at this stage should transform the firm from small or medium sized to large. Literature from journals, books, theses and dissertations was reviewed and content generated to crystallise the research question and findings. SMEs undergoing rapid growth often lack the capital required to grow into large firms. The Johannesburg Stock Exchange offers capital worth millions of dollars on the Alternative Exchange (AltX) platform, created specifically for SMEs, but the uptake is low. The study found that challenges exist on both the supply and demand sides of public equity finance, and these include high listing costs, lack of marketing and the negative attitude of SMEs towards the bourse. The stock market should package their offering to SMEs at the adolescence growth stage better to entice more of them to list. An understanding of the factors that inhibit listing may contribute to making it easier for more SMEs to access funding and for the bourse to grow. There are limited studies on this form of SME financing and this study contributes to the pool of literature on the subject.

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