The Egyptian Stock Exchange (EGX) just launched a new index to track the performance of the small and medium enterprise (SMEs) market, which is still very underdeveloped in Egypt. Tthe Central Bank of Egypt considers enterprises with a business volume between EGP 1 million and 50 million to be small and those with a volume from EGP 50 million to 200 million to be medium-sized.
A staggering 97% of Egypt’s businesses are micro-sized, employing fewer than 10 workers. Enterprises with 10 to 50 employees account for only 2.7% of total businesses while 70% of Egypt’s 2.4 million businesses have only one or two employees. SMEs are important for nourishing the economy and vital for job creation. Recognizing their economic impact, he Egyptian government has been actively updating regulations to cater to SMEs’ needs.
In a conversation with the Executive Chairman Mohamed Farid, we learn that the Tamayoz Index is one of the pillars of EGX’s plan to revitalize the SMEs market. “It began with the revision of the record of sponsors, then developing the capabilities of listed companies, and communicating with investment managers of funds and portfolios and inviting them to invest in these companies seeking to work on enhancing liquidity, and finally a marketing plan that includes developing a website and launching the Tamayoz Index,” Farid says.
What are the reasons behind canceling the Nilex index?
To complete the restructuring plan, we found that the Nilex index for the small and medium-sized companies market needs to be more developed to keep pace with the overall development of the market. Therefore, I will be replaced by the Tamayoz Index as part of the development and restructuring plan, to reflects the development and performance of small and medium stocks after the restructuring process.
What is the mechanism for launching the Tamayoz Index?
A list with the name Tamayoz will be made that includes the best companies listed in the SMEs market, based on the strength of financial and operational performance. That way we’ll have an indicator that reflects the performance and price development of the shares of the existing companies, and thus expresses in real terms on the performance and movement of market transactions.
What are your expectations for the future of the SME market?
We expect by the end of 2021 to be done with the restructuring plan and to have launched the SMEs website. We’ll also have a trading activity in the market along with new offerings and investments, which is the main goal behind this launch.
Before you head out, here’s a little background on Nilex…
The Nile Stock Exchange, which was established in 2010, is the first market that worked to develop SMEs in the Middle East, by providing them with the necessary financing to complete the expansion operations. It also aims to increase growth opportunities for promising companies throughout the region in all Industries.
However, it suffered from the limited number of listed companies (24 companies) and the lack of offerings. This ultimately caused a lack of traders on this stock exchange due to their losses, and their inability to reap profits from their dealings with it.
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